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Demand uncertainty and airport capacity choice

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  • Xiao, Yibin
  • Fu, Xiaowen
  • Zhang, Anming
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    Abstract

    This study analyzes the effects of demand uncertainty on airport capacity choices. It shows that demand uncertainty will not change optimal capacity choice if demand variation is low and capacity cost is high; otherwise the optimal airport capacity under demand uncertainty will be larger than the case when a deterministic mean demand is considered. These conclusions are robust with respect to the different market structures considered in this study and hold for both profit-maximizing and welfare-maximizing airports. The moderating effects of commercial revenue, capital cost, and airport operation cost on airport capacity choice are qualitatively the same in the cases of uncertain demand and deterministic demand.

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    Bibliographic Info

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

    Volume (Year): 57 (2013)
    Issue (Month): C ()
    Pages: 91-104

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    Handle: RePEc:eee:transb:v:57:y:2013:i:c:p:91-104

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    Related research

    Keywords: Airport capacity and pricing; Capacity investment; Demand uncertainty; Airport competition;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Cited by:
    1. MEERSMAN, Hilde & VAN DE VOORDE, Eddy, 2014. "Port capacity extension. A trade-off between public investment and shipping companies' time losses," Working Papers 2014009, University of Antwerp, Faculty of Applied Economics.

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