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Airline Emission Charges: Effects on Airfares, Service Quality, and Aircraft Design

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Author Info
Jan K. Brueckner ()
Anming Zhang ()
Abstract

This paper explores the effect of airline emissions charges on airfares, airline service quality, aircraft design features, and network structure, using a detailed and realistic theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in the effective price of fuel, which is the path by which emissions charges will alter airline choices. The results show that emission charges will raise fares, reduce flight frequency, increase load factors, and raise aircraft fuel efficiency, while having no effect on aircraft size. Given that these adjustments occur in response to the treatment of an emissions externality that is currently unaddressed, they represent efficient changes that move society closer to a social optimum.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2547.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2547

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Related research
Keywords: emissions; airlines;

Find related papers by JEL classification:
L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

References listed on IDEAS
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  1. Panzar, John C, 1979. "Equilibrium and Welfare in Unregulated Airline Markets," American Economic Review, American Economic Association, vol. 69(2), pages 92-95, May. [Downloadable!] (restricted)
  2. Jan K. Brueckner, 2004. "Network Structure and Airline Scheduling," Journal of Industrial Economics, Blackwell Publishing, vol. 52(2), pages 291-312, 06. [Downloadable!] (restricted)
  3. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-69, September. [Downloadable!] (restricted)
  4. Bernd Hayo & Stefan Voigt, 2008. "The Relevance of Judicial Procedure for Economic Growth," MAGKS Papers on Economics 200828, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
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  5. Brueckner, Jan K. & Girvin, Raquel, 2008. "Airport noise regulation, airline service quality, and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 42(1), pages 19-37, January. [Downloadable!] (restricted)
  6. Tae Hoon Oum & Anming Zhang & Yimin Zhang, 1995. "Airline Network Rivalry," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 836-57, November.
  7. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2000. "A note on the optimality of airline networks," Economics Letters, Elsevier, vol. 69(3), pages 429-434, December. [Downloadable!] (restricted)
  8. Jan Brueckner & Ricardo Flores-Fillol, 2007. "Airline Schedule Competition," Review of Industrial Organization, Springer, vol. 30(3), pages 161-177, May. [Downloadable!] (restricted)
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This page was last updated on 2009-12-14.

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