Effects of Airport Concession Revenue Sharing on Airline Competition and Social Welfare
AbstractThis paper studies the competitive and welfare implications when an airport offers airlines the option of sharing its concession revenue. By studying a non-congested airport whose aeronautical charge is regulated, we find that revenue sharing allows the airport and airlines to internalise a positive demand externality between aeronautical services and concession services, which may improve welfare. However, revenue sharing may cause a negative effect on airline competition. An airport may strategically share the revenue with its dominant airlines, which can further strengthen these firms' market power. Such exclusive revenue sharing may or may not improve welfare. Implications for a general airport-airline vertical relationship are discussed. © 2010 LSE and the University of Bath
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy (JTEP).
Volume (Year): 44 (2010)
Issue (Month): 2 (May)
Contact details of provider:
Web page: http://www.bath.ac.uk/e-journals/jtep
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Starkie, David, 2012. "European airports and airlines: Evolving relationships and the regulatory implications," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 40-49.
- Ha, Hun-Koo & Wan, Yulai & Yoshida, Yuichiro & Zhang, Anming, 2013. "Airline market structure and airport efficiency: Evidence from major Northeast Asian airports," Journal of Air Transport Management, Elsevier, vol. 33(C), pages 32-42.
- Kunter, Marcus, 2012. "Coordination via cost and revenue sharing in manufacturer–retailer channels," European Journal of Operational Research, Elsevier, vol. 216(2), pages 477-486.
- Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2013. "Demand uncertainty and airport capacity choice," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 91-104.
- Fu, Xiaowen & Homsombat, Winai & Oum, Tae H., 2011. "Airportâ€“airline vertical relationships, their effects and regulatory policyÂ implications," Journal of Air Transport Management, Elsevier, vol. 17(6), pages 347-353.
- Czerny, Achim I., 2013. "Public versus private airport behavior when concession revenues exist," Economics of Transportation, Elsevier, vol. 2(1), pages 38-46.
- Fu, Xiaowen & Zhang, Anming & Lei, Zheng, 2012. "Will China’s airline industry survive the entry of high-speed rail?," Research in Transportation Economics, Elsevier, vol. 35(1), pages 13-25.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.