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Congestion management under uncertainty in a two-airport system

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Author Info
Achim I. Czerny () (Workgroup for Infrastructure Policy (WIP), Technische Universität Berlin)
Abstract

Congestion pricing and slot constraints can be used to manage airport congestion. We analyze the effect of uncertainty and complementary airport demand on the choice of regulation instruments. Analysis is based on a model including a single airport and uncertain passenger benefits that is gradually extended such that it includes a two-airport system and uncertain congestion costs. We demonstrate that uncertainty favors the use of congestion pricing while demand complementarity can favor the use of slot constraints. However, congestion pricing is always the right choice from a welfare perspective. We show that unregulated monopolistic airports also choose prices as instruments, but, that monopoly charges are too high.

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File URL: http://www.cni.tu-berlin.de/fileadmin/documents/RePEc/cni/working_paper/czerny_2007-congestion_management_under_uncertainty_cni_wp_no_2007-01.pdf
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Publisher Info
Paper provided by Center for Network Industries and Infrastructure (CNI) in its series Working Papers with number 2007-01.

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Length: 31 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:cni:wpaper:2007-01

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Related research
Keywords: Airports; slots; uncertainty; demand complementarity; stochastic correlation;

Find related papers by JEL classification:
D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. 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!]
  2. 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)
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