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Airport Congestion When Carriers Have Market Power

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  • Jan K. Brueckner

Abstract

This 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.

Suggested Citation

  • Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
    • Handle: RePEc:aea:aecrev:v:92:y:2002:i:5:p:1357-1375
    Note: DOI: 10.1257/000282802762024548
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    References listed on IDEAS

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    1. Christopher Mayer & Todd Sinai, "undated". "Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why All Delays Are Not Evil," Zell/Lurie Center Working Papers 393, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
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    10. Daniel, Joseph I. & Pahwa, Munish, 2000. "Comparison of Three Empirical Models of Airport Congestion Pricing," Journal of Urban Economics, Elsevier, vol. 47(1), pages 1-38, January.
    11. Brueckner, Jan K, 2002. "Internalization of airport congestion," Journal of Air Transport Management, Elsevier, vol. 8(3), pages 141-147.
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