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Effects of airport terminal competition: A vertical structure approach

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  • Xu, Fangzhou
  • Hanaoka, Shinya

Abstract

The introduction of intra-airport terminal competition is viewed as a method to restrain the market power of airports; yet, there is little industry evidence, and existing research has not fully clarified the possible impact. This study investigates the effects of terminal competition on pricing and social surplus. We develop an analytical model and find that having competing terminals neither lowers the prices nor enhances the social surplus in most cases unless the operation of the terminal and runway services are completely separated before introducing competition. This situation is regardless of whether airlines have the freedom to change the base terminal.

Suggested Citation

  • Xu, Fangzhou & Hanaoka, Shinya, 2021. "Effects of airport terminal competition: A vertical structure approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:transe:v:145:y:2021:i:c:s1366554520308152
    DOI: 10.1016/j.tre.2020.102172
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