Inverting the regulatory rules? Optimizing airport regulation to account for commercial revenues
AbstractThis paper analyzes the role of commercial revenues in today's airport regulatory system. We find that the current regulatory regime only partially achieves core aims such as welfare maximization. After highlighting instances in which airport price regulation is not economically justified, we explore the potential for airports to exercise market power in the commercial sector. In certain circumstances, we advocate the introduction of an 'inverted' dual till system under which commercial as opposed to aviation revenues are the focus of price regulation. The suitability of such a system varies from airport to airport, however, depending on various factors, such as the airport's competitive environment and the presence of capacity constraints. --
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Bibliographic InfoPaper provided by Dresden University of Technology, Faculty of Transportation and Traffic Sciences "Friedrich List", Institute for Transport and Economics in its series Discussion Papers with number 1/2011.
Date of creation: 2011
Date of revision:
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Web page: http://tu-dresden.de/die_tu_dresden/fakultaeten/vkw/iwv
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Airport regulation; non-aviation revenues; price differentiation; single till; dual till;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-27 (All new papers)
- NEP-COM-2011-07-27 (Industrial Competition)
- NEP-REG-2011-07-27 (Regulation)
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