Marginal Costs, Price Elasticities of Demand, and Second-best Pricing in a Multiproduct Industry: An Application for Spanish Port Infrastructure

This paper tries to evaluate the price-setting structure for the Spanish port authorities during the period 1986-2005. To do this, we compare the structure of the most important port fees with those results obtained using a second-best mechanism based on Ramsey prices. The results show that port fees do not maximise social surplus due to the existence of heterogeneity among port authorities. In this sense, a new regulation which would allow port authorities to set their own fees may represent an improvement for the present mechanism. © 2013 LSE and the University of Bath