In Norway, domestic ferry services are regarded as integrated parts of the national road system. The ferries are owned and operated by individual ferry companies on a concession basis. The companies receive subsidies from the national road authorities as the regulated fares provide insufficient revenue to cover operating costs.

So far, subsidies have been determined through annual negotiations between each company and the road authorities. The current system runs on block grant contracts. Each company neither competes 'on the water' (i.e. with other ferry companies) nor for its concessions. This lack of competition is assumed to give rise to X-inefficiency, and the subsidies have grown steadily in recent years.
In order to enhance efficiency and limit the subsidies, tender competition has been introduced on a sample of ferry links. Based on these experiences, the Norwegian parliament has sanctioned that the remaining ferry links should be subjected to competitive tendering as well.