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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.

Suggested Citation

  • Kratzsch, Uwe & Sieg, Gernot, 2009. "When to regulate airports: A simple rule," Economics Department Working Paper Series 6, Technische Universität Braunschweig, Economics Department.
    • Handle: RePEc:zbw:tbswps:6
    as

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    References listed on IDEAS

    as
    1. Sieg, Gernot, 2010. "Grandfather rights in the market for airport slots," Transportation Research Part B: Methodological, Elsevier, vol. 44(1), pages 29-37, January.
    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(1), pages 25-36, February.
    3. Sieg Gernot & Stegemann Ulrike, 2010. "Strategic Debt Management within the Stability and Growth Pact," Review of Economics, De Gruyter, vol. 61(3), pages 225-240, December.
    4. 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(1), pages 25-36, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    airport regulation; aviation and non-aviation revenues; complementarity of aviation and non-aviation; locational rents;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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