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Airport congestion and capacity when carriers are asymmetric

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  • Lin, Ming Hsin

Abstract

This study investigates pricing and capacity investment for a congested airport served by multiple carriers. Removing the symmetric carrier assumption, when airlines’ market shares are potentially asymmetric, the socially non-discriminatory optimal charge rule should include an additional term that corrects the distortion caused by pricing itself. The first-best outcome cannot be achieved, and the airport overinvests under the non-discriminatory optimal charge. However, if the airport levies discriminatory charges respective to carriers, the first-best outcome can be achieved and capacity investment is socially efficient under discriminatory optimal charges. In addition, the discriminatory optimal charges levied on a carrier with a larger (smaller) market share are lower (higher).

Suggested Citation

  • Lin, Ming Hsin, 2019. "Airport congestion and capacity when carriers are asymmetric," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 273-290.
    • Handle: RePEc:eee:indorg:v:62:y:2019:i:c:p:273-290
    DOI: 10.1016/j.ijindorg.2018.07.006
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    References listed on IDEAS

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    Cited by:

    1. Lin, Ming Hsin, 2021. "Airport pricing and capacity: Schedule versus congestion delays," Research in Transportation Economics, Elsevier, vol. 90(C).
    2. Gong, Zhenwei & Zhang, Fangni & Liu, Wei & Graham, Daniel J., 2023. "On the effects of airport capacity expansion under responsive airlines and elastic passenger demand," Transportation Research Part B: Methodological, Elsevier, vol. 170(C), pages 48-76.
    3. Lin, Ming Hsin, 2022. "Pricing regime choices for international airports: A rationale for the non-discrimination principle," Economics of Transportation, Elsevier, vol. 31(C).
    4. Lang, Hao & Czerny, Achim I., 2023. "Comparison of decentralized slot and pricing policies when airports are substitutes for non-local passengers," Transportation Research Part A: Policy and Practice, Elsevier, vol. 171(C).
    5. Akio Kawasaki, 2020. "Airport pricing strategy by hub airports: does the number of local airports matter?," Asia-Pacific Journal of Regional Science, Springer, vol. 4(3), pages 835-857, October.
    6. Calzada, Joan & Fageda, Xavier, 2023. "Airport dominance, route network design and flight delays," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    7. Lin, Ming Hsin, 2020. "Congestion pricing and capacity for internationally interlinked airports," Transportation Research Part B: Methodological, Elsevier, vol. 142(C), pages 126-142.

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    More about this item

    Keywords

    Airport congestion; Asymmetric carriers; Discriminatory/Non-discriminatory charges; Capacity investment;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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