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Internalization of Airport Congestion: A Network Analysis

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Author Info
Jan K. Brueckner ()

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Abstract

The likely resurgence of air traffic in the U.S. means that airport congestion is a problem that must soon be confronted by policy makers. As part of their policy response, it is probable that some form of congestion pricing will be imposed at selected U.S. airports in the relatively near future. The theory developed in this paper, which extends the results of Brueckner (2002), provides an important guide for the formulation of congestion pricing rules. In particular, the theory says that the congestion tolls levied on the various airlines at a particular airport should generally be different, with the tolls being inversely related to a carrier's airport flight share. Internalization of airport congestion is the reason for this inverse relationship. In operating another peak flight, a carrier takes account of the congestion damage imposed on the other flights it operates. If these flights account for a large share of the airport's traffic, then most of the congestion created by the additional flight is internalized, justifying a low toll. By contrast, if the carrier operates only a few of the airport's flights, then little internalization occurs, and a high toll is needed to force the carrier to take into account the congestion damage it causes. The resulting flight-share rule is easy to implement, and it could help policymakers design proper toll systems at U.S. airports

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Publisher Info
Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 756.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_756

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Find related papers by JEL classification:
H00 - Public Economics - - General - - - General
L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

References listed on IDEAS
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  1. Carlin, Alan & Park, Rolla Edward, 1970. "Marginal Cost Pricing of Airport Runway Capacity," American Economic Review, American Economic Association, vol. 60(3), pages 310-19, June. [Downloadable!] (restricted)
  2. Christopher Mayer & Todd Sinai, . "Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why All Delays Are Not Evil," Zell/Lurie Center Working Papers 393, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania. [Downloadable!] (restricted)
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  3. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December. [Downloadable!] (restricted)
  4. Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December. [Downloadable!] (restricted)
  5. Brueckner, Jan K & Spiller, Pablo T, 1994. "Economies of Traffic Density in the Deregulated Airline Industry," Journal of Law & Economics, University of Chicago Press, vol. 37(2), pages 379-415, October.
  6. Daniel, Joseph I. & Pahwa, Munish, 2000. "Comparison of Three Empirical Models of Airport Congestion Pricing," Journal of Urban Economics, Elsevier, vol. 47(1), pages 1-38, January. [Downloadable!] (restricted)
  7. Daniel, Joseph I, 1995. "Congestion Pricing and Capacity of Large Hub Airports: A Bottleneck Model with Stochastic Queues," Econometrica, Econometric Society, vol. 63(2), pages 327-70, March. [Downloadable!] (restricted)
  8. Levine, Michael E, 1969. "Landing Fees and the Airport Congestion Problem," Journal of Law & Economics, University of Chicago Press, vol. 12(1), pages 79-108, April.
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Cited by:
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  1. Jan K. Brueckner, 2008. "Slot-Based Approaches to Airport Congestion Management," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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This page was last updated on 2008-9-22.

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