Wednesday 19 September 2012

CART Logic

We moor on a BW mooring and we have been there for almost three years. Having bid and won the auction at just a few pounds over the reserve price. The idea of an auction of mooring products and services seems to me to be an unusual way to conduct a sole provider business.  

Can you imagine your local supermarket having such a business model. It could not work for them because they have some real competition from other supermarkets. People like to shop around for the best price - giving them an option of enjoying what's generally known as market forces.

Now CART is in a different situation to your local supermarket. As they do not have any real competitors. They are in effect a sole provider with nothing in the way of any real competition. They are essentially in an unregulated market with prices fixed by themselves.

Economics question: Is a mooring with a reserve price of £1000.00 which remains empty because it is unwanted or considered overpriced. As a result it does not have any bids. Is it more or less economic than a best offer bid of several hundred pounds.

There is this phrase that gets quoted in the CART bidding process "Guide Price" and "Reserve Price". The opening bid has to start at the Reserve Price as any mooring which could be let below this price is considered to be "uneconomic." The whole concept of market forces has no place in this system.

The effect of true "Market Forces" being used to set the "economic worth" of a mooring and to give boaters a level playing pitch could be easily set into this system by including a "best offer"  choice.

But how are the economic prices calculated.  The economic and uneconomic calculation seems to be a secret known only to CART insiders. In that lies a problem with regard to openness and transparency. You, however have no choice in the matter.

How this cost is calculated is a conundrum.

Take any arbitrary metre length of canal with an accompanying length of towpath. What costs are involved in making it into a mooring. Dredging to allow the boat to come close to the bank edge. Maybe clear away some scrub. But these are just run of the mill wear and tear maintenance requirements that should be being done anyway. Many of the advertised linear moorings - like visitor moorings have no security and no additional services such as electricity provision, dedicated parking, waste disposal or sanitary disposal. 

So how are those prices calculated and is the process fair.

I have wondered for some time now if CART could be referred to The Competition Commission (a public body responsible for investigating businesses under competition law in the United Kingdom)  Or even the Office of Fair Trading (established by the Fair Trading Act 1973, which enforces both consumer protection and competition law) acting as the UK's economic regulator. 

The OFT's goal is to make markets work well for consumers, ensuring vigorous competition between fair-dealing businesses and prohibiting unfair practices such as rogue trading, scams and cartels. Its role was modified and its powers changed with the Enterprise Act 2002.

The Competition Act of 1998 and the Enterprise Act 2002 gave the Competition Commission wider powers so that it now makes decisions on inquiries. The Competition Commission is also responsible for taking appropriate actions and measures following inquiries which have identified competition problems.

Not only do CART own the moorings, not only do CART set the minimum price, but CART also control the bidding process. This removes any notion of competition and market forces from the whole process. 

Is it fair?


1 comment:

  1. I have been wondering this as well; the least offensive answer I can come up with is that the whole Bid process is a farce, the level off offence will increase as I am aloud to be NSFW.

    The system seems to be price it high, and hope that some one bids on it; making it look like good value for money, thus starting a bidding war… the only winners can be CaRT from this point on, Jo Boater is priced back to being a CC.

    You are quite correct in your pointing out that moorings Auctioned out have no security, or facilities. but please keep this information away from local councils; or they may try to do this with city centre car parks/street parking (you can draw the parallels between facilities provided).


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