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A note on "price cap regulation of congested airports"

Author

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  • Evangelinos, Christos
  • Wittkowski, Antje
  • Püschel, Ronny

Abstract

Conventional economic models in airport regulation assume, that airports have considerable market power and may exploit it against airlines. Given, that many airports are served by only a limited number of airlines, mono- or oligopsony relationships may exist. This paper relaxes therefore this assumption. We use an existing model to test the impact of mono- and duopsony on the outcome of several regulatory options. Our results show, that in such cases the binding conditions for airport charges may change and, hence, optimal airport regulation should take into account also the degree of mono- or oligopsony airline power. In some cases the abolishment of any kind of regulation can lead to welfare gains.

Suggested Citation

  • Evangelinos, Christos & Wittkowski, Antje & Püschel, Ronny, 2016. "A note on "price cap regulation of congested airports"," Discussion Papers 2/2016, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.
    • Handle: RePEc:zbw:tudiwv:22016
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    References listed on IDEAS

    as
    1. Brueckner, Jan K. & Van Dender, Kurt, 2008. "Atomistic congestion tolls at concentrated airports? Seeking a unified view in the internalization debate," Journal of Urban Economics, Elsevier, vol. 64(2), pages 288-295, September.
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    3. Oliver Hart & Jean Tirole, 1990. "Vertical Integration and Market Foreclosure," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1990 Micr), pages 205-286.
    4. Hangjun Yang & Anming Zhang, 2011. "Price-cap regulation of congested airports," Journal of Regulatory Economics, Springer, vol. 39(3), pages 293-312, June.
    5. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
    6. Achim Czerny, 2006. "Price-cap Regulation of Airports: Single-till Versus Dual-till," Journal of Regulatory Economics, Springer, vol. 30(1), pages 85-97, July.
    7. Fu, Xiaowen & Homsombat, Winai & Oum, Tae H., 2011. "Airport–airline vertical relationships, their effects and regulatory policy implications," Journal of Air Transport Management, Elsevier, vol. 17(6), pages 347-353.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Airport Regulation; Single-Till; Dual-Till; Aitline Monopsony and Oligopsony Power;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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