Airport Congestion When Carriers Have Market Power
AbstractThis paper analyzes airport congestion when carriers are nonatomistic, showing how the results of the road-pricing literature are modified when the economic agents causing congestion have market power. The analysis shows that when an airport is dominated by a monopolist, congestion is fully internalized, yielding no role for congestion pricing under monopoly conditions. Under a Cournot oligopoly, however, carriers are shown to internalize only the congestion they impose on themselves. A toll that captures the uninternalized portion of congestion may then improve the allocation of traffic. The analysis is supported by some rudimentary empirical evidence.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 92 (2002)
Issue (Month): 5 (December)
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