The Institute for Justice has taken on a Washington state case in which the government refuses to allow competition on a ferry route and has given a monopoly to one company. Washington’s Utilities and Transportation Commission has thus declared that the existing ferry company is the winner, and that’s the way it will be. This despite the fact that we know consumers win when competitive forces are at play.
The ferry needs to have 25 passengers to break even. During the tourist season the two ferries, which can carry more than 400 passengers between them, are usually packed. But during the winter there are only a handful of days the ridership pays for all the expenses. The Courtneys argue if there was competition, services would be better and ridership would increase year-round, bringing in enough business for two companies to survive.
Allowing the monopoly is Washington’s Utilities and Transportation Commission. Asked by the legislature recently to defend its position, the commission wrote, “a single, regulated provider can maintain service without the threat of having customers drawn away by a competing provider.”
Actually, you WANT there to be the threat that customers will be drawn away. That is called a market force, which provides the incentive for all competitors to improve their services and lower their costs.
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