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Grandfather rights in the market for airport slots

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  • Sieg, Gernot

Abstract

Grandfather rights are currently used in the European Union to allocate airport slots. This article shows that airports prefer such a use-it-or-lose-it rule to unconditional property rights. Assuming that there are informational asymmetries between airports and air carriers because air carriers have better information on passenger demand, the use-it-or-lose-it rule increases slot use when demand for air transport is low. Airport profits increase and those of the air carriers, together with social welfare, decrease. The profit-maximizing slot-use ratio is less than one.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

Volume (Year): 44 (2010)
Issue (Month): 1 (January)
Pages: 29-37

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Handle: RePEc:eee:transb:v:44:y:2010:i:1:p:29-37

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Keywords: Airports Grandfather rights Use-it-or-lose-it rule Airport slots;

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References

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  1. Jan K. Brueckner & Raquel Girvin, 2006. "Airport Noise Regulation, Airline Service Quality, and Social Welfare," Working Papers 060706, University of California-Irvine, Department of Economics.
  2. Batool, Irem & Sieg, Gernot, 2009. "Bread, peace and the attrition of power: Economic events and German election results," Economics Department Working Paper Series 3, Technische Universität Braunschweig, Economics Department.
  3. Button, Kenneth, 2005. "A simple analysis of the rent seeking of airlines, airports and politicians," Transport Policy, Elsevier, vol. 12(1), pages 47-56, January.
  4. Abeyratne, Ruwantissa I.R., 2000. "Management of airport congestion through slot allocation," Journal of Air Transport Management, Elsevier, vol. 6(1), pages 29-41.
  5. Barbot, Cristina, 2004. "Economic effects of re-allocating airports slots: a vertical differentiation approach," Journal of Air Transport Management, Elsevier, vol. 10(5), pages 333-343.
  6. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
  7. Ian Jones & Ivan Viehoff & Phillipa Marks, 1993. "The economics of airport slots," Fiscal Studies, Institute for Fiscal Studies, vol. 14(4), pages 37-57, November.
  8. Eric Pels & Erik Verhoef, 2003. "The Economics of Airport Congestion Pricing," Tinbergen Institute Discussion Papers 03-083/3, Tinbergen Institute.
  9. Starkie, David, 1998. "Allocating airport slots: a role for the market?," Journal of Air Transport Management, Elsevier, vol. 4(2), pages 111-116.
  10. Zhang, Anming & Zhang, Yimin, 2006. "Airport capacity and congestion when carriers have market power," Journal of Urban Economics, Elsevier, vol. 60(2), pages 229-247, September.
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Citations

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Cited by:
  1. Gürtler, Marc & Sieg, Gernot, 2006. "Crunch time: The optimal policy to avoid the "Announcement Effect" when terminating a subsidy," Working Papers FW24V2, Technische Universität Braunschweig, Institute of Finance.
  2. Alessandro Avenali & Tiziana D'Alfonso & Claudio Leporelli & Giorgio Matteucci & Alberto Nastasi & Pierfrancesco Reverberi, 2014. "A supervised market mechanism for efficient airport slot allocation," DIAG Technical Reports 2014-03, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  3. Pellegrini, Paola & Castelli, Lorenzo & Pesenti, Raffaele, 2012. "Secondary trading of airport slots as a combinatorial exchange," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 1009-1022.
  4. Sieg, Gernot & Stegemann, Ulrike, 2009. "Strategic debt management within the stability and growth pact," Economics Department Working Paper Series 5, Technische Universität Braunschweig, Economics Department.
  5. Rothbauer, Julia & Sieg, Gernot, 2010. "Quality standards for passenger trains: Political majorities and environmental costs," Economics Department Working Paper Series 8, Technische Universität Braunschweig, Economics Department.
  6. Batool, Irem & Sieg, Gernot, 2009. "Bread, peace and the attrition of power: Economic events and German election results," Economics Department Working Paper Series 3, Technische Universität Braunschweig, Economics Department.
  7. repec:aeg:report:2014-3 is not listed on IDEAS
  8. Kratzsch, Uwe & Sieg, Gernot, 2012. "No need to regulate airports with predominantly non-aeronautical revenues," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 52, pages 7.
  9. Kratzsch, Uwe & Sieg, Gernot, 2009. "When to regulate airports: A simple rule," Economics Department Working Paper Series 6, Technische Universität Braunschweig, Economics Department.

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