AN IMPLEMENTATION PROPOSAL OF INNOVATIVE PRICING IN GREEK COASTAL SHIPPING

Abstract

Greek coastal shipping is an industry which passed from the state regulatory interference to market forces. Its fare structure (tariff) was based on average (or total) cost and distance was the representative cost variable. As it is an industry facing strong economies of scale, average cost is higher than marginal cost. This means that companies equalizing prices to marginal cost, following Pareto–efficient allocation of resources, are driven to losses and are forced to seek other methods of efficient pricing policy. The purpose of this article is to examine the implementation of “innovative” pricing in Greek coastal shipping. “Innovative” pricing contains applicable measures in order to increase ticket prices in “peak” periods without affecting the level of quality, the number of passengers and the market share. The analysis results show that average fare will not necessarily raise. Ticket increases may be accompanied by quantitative discounts in periods of low demand. In these cases, “season tickets” can be applied.

Keywords

• greek coastal shipping
• peak periods
• economies of scale
• innovative pricing
• season tickets