Airport Marginal Cost Pricing: Discussion and an Application to Swedish Airports
AbstractWe derive an optimal airport-pricing model, both with and without a constraint on the revenues, that includes all relevant external marginal costs,. Given the results of the model we discuss the implications on the profit of airports, and find that given that the proceeds of the environmental charges are seen as revenue for the airport, it is not obvious that a marginal cost-pricing scheme would result in financial deficits for the airports, this despite the reasonable assumption of increasing returns to scale in airport capacity. Using relatively crude estimates of the marginal costs, we compare the current pricing scheme with a marginal cost pricing scheme. We find that the effect on revenues of moving towards a marginal cost pricing scheme may not be so dramatic; especially not if the marginal external costs include estimated marginal costs of CO2 emissions.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 85.
Length: 21 pages
Date of creation: 20 Dec 2002
Date of revision:
Publication status: Published in International Journal of Transport Economics , 2003, pages 283-303.
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
Airport pricing; marginal cost pricing; emission charge;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
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