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When to regulate airports: A simple rule

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  • Kratzsch, Uwe
  • Sieg, Gernot

Abstract

Landing fees at airports are regulated almost all over the world since airports are assumed to abuse their market power. We find that monopolistic airports have an incentive to restrain landing fees when they generate additional non-aviation revenues and that the optimal landing fee decreases in the degree of complementarity of aviation and non-aviation. Furthermore, we show that monopolistic airports will not have an incentive to abuse their market power anymore so that a price regulation becomes inappropriate as soon as non-aviation revenues increase above 50% of all airport revenues. --

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Bibliographic Info

Paper provided by Technische Universität Braunschweig, Economics Department in its series Economics Department Working Paper Series with number 6.

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Date of creation: 2009
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Handle: RePEc:zbw:tbswps:6

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Related research

Keywords: airport regulation; aviation and non-aviation revenues; complementarity of aviation and non-aviation; locational rents;

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  1. Sieg, Gernot, 2009. "Grandfather rights in the market for airport slots," Economics Department Working Paper Series 4, Technische Universität Braunschweig, Economics Department.
  2. Marc Gürtler & Gernot Sieg, 2010. "Crunch Time: A Policy to Avoid the 'Announcement Effect' when Terminating a Subsidy," German Economic Review, Verein für Socialpolitik, vol. 11, pages 25-36, 02.
  3. Sieg, Gernot & Stegemann, Ulrike, 2009. "Strategic debt management within the stability and growth pact," Economics Department Working Paper Series 5, Technische Universität Braunschweig, Economics Department.
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