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The impact of airport competition on technical efficiency: A Stochastic Frontier Analysis applied to Italian airports

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  • Malighetti, Paolo
  • Martini, Gianmaria
  • Scotti, Davide
  • Volta, Nicola

Abstract

We investigate how the intensity of competition among airports affects their technical efficiency by computing airports’ markets on the basis of a potential demand approach. We find that the intensity of competition has a negative impact on airports’ efficiency in Italy during the 2005–2008 period. This implies that airports belonging to a local air transportation system where competition is strong exploit their inputs less intensively than do airports with local monopoly power. Furthermore, we find that public airports are more efficient than private and mixed ones. Since public airports take into account the positive externalities created by air transportation in the local economy, they are more willing to subsidize airlines in developing the airports’ connections. Hence, policy makers should provide incentives to implement airports’ specialization in local systems where competition is strong. Moreover, when regulating airport charges, they should take into account the impact of the above externalities.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24648.

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Date of creation: May 2010
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Handle: RePEc:pra:mprapa:24648

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Keywords: Airport efficiency; stochastic distance function; airport competition;

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Cited by:
  1. De Nicola, Arianna & Gitto, Simone & Mancuso, Paolo, 2013. "Airport quality and productivity changes: A Malmquist index decomposition assessment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, Elsevier, vol. 58(C), pages 67-75.
  2. Michelle Phillips, 2013. "Inefficiency in Japanese water utility firms: a stochastic frontier approach," Journal of Regulatory Economics, Springer, Springer, vol. 44(2), pages 197-214, October.
  3. Pavlyuk, Dmitry, 2012. "Airport Benchmarking and Spatial Competition: a Critical Review," MPRA Paper 43391, University Library of Munich, Germany.
  4. Tiziana D’Alfonso & Cinzia Daraio & Alberto Nastasi, 2013. "Assesing the Impact of Competition on the Efficiency of Italian Airports," DIAG Technical Reports 2013-01, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  5. Mancuso, Paolo, 2014. "An analysis of the competition that impinges on the Milan–Rome intercity passenger transport link," Transport Policy, Elsevier, vol. 32(C), pages 42-52.
  6. De Luca, Mario & Dell'Acqua, Gianluca, 2014. "Runway surface friction characteristics assessment for Lamezia Terme airfield pavement management system," Journal of Air Transport Management, Elsevier, Elsevier, vol. 34(C), pages 1-5.

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