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

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  • Leonardo J. Basso
  • Anming Zhang
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    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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    Bibliographic 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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    Cited by:
    1. Bilotkach, Volodymyr & Clougherty, Joseph A. & Mueller, Juergen & Zhang, Anming, 2011. "Regulation, Privatization, and Airport Charges: Panel Data Evidence from European Airports," CEPR Discussion Papers 8618, C.E.P.R. Discussion Papers.
    2. Noriaki Matsushima & Kazuhiro Takauchi, 2013. "Port Privatization in an International Oligopoly," ISER Discussion Paper 0864, Institute of Social and Economic Research, Osaka University.
    3. Basso, Leonardo J. & Guevara, Cristián Angelo & Gschwender, Antonio & Fuster, Marcelo, 2011. "Congestion pricing, transit subsidies and dedicated bus lanes: Efficient and practical solutions to congestion," Transport Policy, Elsevier, vol. 18(5), pages 676-684, September.

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