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Sequential peak-load pricing: the case of airports and airlines

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Author Info
Leonardo J. Basso
Anming Zhang
Abstract

We investigate airport peak-load pricing using a vertical structure of airport and airlines. We find that a profit-maximizing airport would charge higher peak and off-peak runway prices and a higher peak/off-peak price differential than a public airport. Consequently, airport privatization would lead to both fewer total passengers and fewer passengers in the peak period. Although peak-travelling passengers benefit from fewer delays, this low level of peak congestion is not efficient, suggesting that airport privatization cannot be judged based on its effect on congestion alone. We also examine pricing behaviour of a public airport constrained to charge a time independent price.

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File URL: http://economics.ca/cgi/xms?jab=v41n3/CJEv41n3p1087.pdf
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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 41 (2008)
Issue (Month): 3 (August)
Pages: 1087-1119
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Handle: RePEc:cje:issued:v:41:y:2008:i:3:p:1087-1119

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Find related papers by JEL classification:
L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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This page was last updated on 2009-11-25.

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