Environmental Taxation in Airline Markets
AbstractOver the last two decades many airline markets have been deregulated, resulting in increased competition and use of different types of networks. At the same time there has been an intense discussion on environmental taxation of airline traffic. It is likely that an optimal environmental tax and the effects of a tax differ between different types of aviation markets. In this paper we derive optimal environmental taxes for different types of airline markets. The first type of market is a multiproduct monopoly airline operating either a point-to-point network or a hub-and-spoke network. The optimal tax is shown to be similar in construction to an optimal tax for a monopolist. We also compare the environmental impact of the two types of networks. Given no differences in marginal damages between airports we find that an airline will always choose the network with the highest environmental damages. The second type of market we investigate is a multiproduct duopoly, where two airlines compete in both passengers and flights. The formulation of the optimal tax is similar to the optimal tax of a single product oligopoly. However, we also show that it is, because of strategic effects, difficult to determine the effects of the tax on the number of flights.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 24.
Length: 23 pages
Date of creation: 31 May 2000
Date of revision:
Publication status: Published in Transportation Research, Part D, 2002, pages 57-73.
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
Environmental taxation; Multiproduct duopoly; Aviation; Networks;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-06-12 (All new papers)
- NEP-ENE-2000-06-12 (Energy Economics)
- NEP-ENV-2000-06-12 (Environmental Economics)
- NEP-PUB-2000-06-12 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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