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International Airports: Economies of Scale and Marginal Costs

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  • Martín, Juan Carlos
  • Voltes-Dorta, Augusto

Abstract

Regarding some regulation fields, such as optimal investments and pricing policies, marginal cost estimations for infrastructure-intensive transport services is always a challenging task. The lack of comparable data among airports is one of the causes which could explain the relative scarcity of this literature in the past. In this paper, the returns to scale and marginal costs are estimated using single-and multi-product translog specifications of a long-run cost function. A pooled database of financial data on 41 airports across Europe, North America, Asia, and Australia for the period 1991-2005 was used. Significant economies of scale and little degree of technological progress are found using Work Load Units (WLU) and Air Traffic Movements (ATM) as output measures. Additionally, individual long-run marginal cost estimates are provided for each output measure, and for every airport under study.

Suggested Citation

  • Martín, Juan Carlos & Voltes-Dorta, Augusto, 2008. "International Airports: Economies of Scale and Marginal Costs," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 47(1).
    • Handle: RePEc:ags:ndjtrf:206899
    DOI: 10.22004/ag.econ.206899
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    References listed on IDEAS

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    1. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
    2. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
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    Cited by:

    1. David Ennen & Irem Batool, 2017. "Airport Efficiency in Pakistan - A Data Envelopment Analysis with Weight Restrictions," Working Papers 25, Institute of Transport Economics, University of Muenster.
    2. Sheard, Nicholas, 2017. "Airport consolidation and the provision of air services," Journal of Air Transport Management, Elsevier, vol. 60(C), pages 31-44.
    3. Ennen, David & Batool, Irem, 2018. "Airport efficiency in Pakistan - A Data Envelopment Analysis with weight restrictions," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 205-212.
    4. Niemeier, Hans-Martin, 2021. "Is economics good for aviation policy? Some problems in bridging the gap between theory and policy," Journal of Air Transport Management, Elsevier, vol. 96(C).
    5. Gurtner, Gérald & Cook, Andrew & Graham, Anne & Cristóbal, Samuel, 2018. "The economic value of additional airport departure capacity," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 1-14.
    6. Button, Kenneth, 2020. "The economics of Africa's floriculture air-cargo supply chain," Journal of Transport Geography, Elsevier, vol. 86(C).
    7. Martín, Juan Carlos & Voltes-Dorta, Augusto, 2011. "The econometric estimation of airports' cost function," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 112-127, January.
    8. Mathisen, T.A. & Jørgensen, F. & Solvoll, G., 2014. "Marginal costs pricing of airport operations in Norway," Research in Transportation Economics, Elsevier, vol. 45(C), pages 49-56.
    9. Kutlu, Levent & McCarthy, Patrick, 2016. "US airport ownership, efficiency, and heterogeneity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 117-132.

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