Market structure, countervailing power and price discrimination: the case of airports
AbstractA number of interesting policy questions have arisen regarding airport landing fees. For example, what is the impact of joint ownership of airports? Does airline countervailing power stop airports raising fees? Should airports be prohibited, as an EU directive intends, from charging differential input prices to airlines? We set out a model of upstream airports and downstream airlines with varying countervailing power and pricing structures. Our major findings are: (a) an increase in upstream concentration or in the degree of differentiation between airports always increases the landing fee; (b) the effect of countervailing power, via an increase in downstream concentration, lowers landing fees, but typically does not pass through to consumers; (c) with Cournot competition, uniform landing fees are always higher than discriminatory fees.
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Bibliographic InfoPaper provided by Imperial College, London, Imperial College Business School in its series Working Papers with number 6857.
Date of creation: May 2011
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Other versions of this item:
- Haskel, Jonathan & Iozzi, Alberto & Valletti, Tommaso, 2013. "Market structure, countervailing power and price discrimination: The case of airports," Journal of Urban Economics, Elsevier, vol. 74(C), pages 12-26.
- Jonathan Haskel & Alberto Iozzi & Tommaso Valletti, 2010. "Market Structure, Countervailing Power and Price Discrimination: The Case of Airports," CEIS Research Paper 177, Tor Vergata University, CEIS, revised 09 Dec 2010.
- Haskel, Jonathan & Iozzi, Alberto & Valletti, Tommaso, 2011. "Market Structure, Countervailing Power and Price Discrimination: The Case of Airports," CEPR Discussion Papers 8280, C.E.P.R. Discussion Papers.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems - - - Government Pricing and Policy
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