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Airport pricing versus (grandfathered) slots: A generalization

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  • Lang, Hao
  • Czerny, Achim I.

Abstract

Many passengers can choose among various destinations for their flight trips (for instance, a leisure trip from Asia to Europe or the US). This study tests the sensitivity of the outcomes of equilibrium congestion policies with respect to changes in airport network and demand structures. A major feature is to incorporate substitute destination choices for origin–destination passengers into the analysis of equilibrium airport congestion policies involving slot or pricing policies. The analysis shows that the presence of substitute destination choices is a necessary condition for equilibrium slot quantities to reach the first-best outcome that maximizes the welfare of all airport regions whereas equilibrium pricing levels will always be too high relative to the first-best prices independent of the presence or absence of substitute destination choices. Examples based on specific functional forms and numerical simulations are used to illustrate the main results.

Suggested Citation

  • Lang, Hao & Czerny, Achim I., 2022. "Airport pricing versus (grandfathered) slots: A generalization," Economics of Transportation, Elsevier, vol. 29(C).
    • Handle: RePEc:eee:ecotra:v:29:y:2022:i:c:s2212012221000526
    DOI: 10.1016/j.ecotra.2021.100249
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    References listed on IDEAS

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    3. Till Kösters & Marlena Meier & Gernot Sieg, 2023. "Effects of the use-it-or-lose-it rule on airline strategy and climate," Working Papers 36, Institute of Transport Economics, University of Muenster.

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    More about this item

    Keywords

    Network; Airports; Slots; Congestion pricing; Imperfect substitutes; Origin–destination passengers;
    All these keywords.

    JEL classification:

    • 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
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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