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Economic and Environmental Effects of Airline Deregulation


Author Info

  • Youdi Schipper
  • Piet Rietveld

    (Vrije Universiteit Amsterdam)


This paper deals with the issue of regulatory reform in the airline industry, in connection with environmental externalities. Deregulation has led to shorter routes, higher frequencies, probably larger aircraft sizes and more intense peak traffic at airports. In addition, deregulation has led to lower average real fares, although various barriers to entry still allow carriers to keep prices above competitive levels. Environmental effects have thus far not received much attention in the discussion on deregulation. The paper contains a discussion of various types of environmental effects of aviation. An analytical model is developed to compare these effects in hub and spoke systems with a fully connected system. The conclusion is that for CO2 emissions private cost considerations and environmental considerations may run parallel in the choice of transport network, but that for other types of pollutants there may be a clear conflict. In addition the paper pays attention to equity aspects of externalities.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 97-031/3.

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Date of creation: 27 Feb 1997
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Handle: RePEc:dgr:uvatin:19970031

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  1. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
  2. Doganis, Rigas, 1994. "The impact of liberalization on European airline strategies and operations," Journal of Air Transport Management, Elsevier, vol. 1(1), pages 15-25.
  3. Kenneth J. Button, 1996. "Aviation Deregulation In The European Union: Do Actors Learn In The Regulation Game?," Contemporary Economic Policy, Western Economic Association International, vol. 14(1), pages 70-80, 01.
  4. Winston, Clifford, 1993. "Economic Deregulation: Days of Reckoning for Microeconomists," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1263-89, September.
  5. Dudey, Marc, 1992. "Dynamic Edgeworth-Bertrand Competition," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1461-77, November.
  6. Morrison, Steven A & Winston, Clifford, 1985. "Intercity Transportation Route Structures under Deregulation: Some Assessments Motivated by the Airline Experience," American Economic Review, American Economic Association, vol. 75(2), pages 57-61, May.
  7. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  8. Barrett, Sean D., 1992. "Barriers to contestability in the deregulated European aviation market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 26(2), pages 159-165, March.
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