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Public versus private airport behavior when concession revenues exist

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  • Czerny, Achim I.

Abstract

The share of revenues from airport concession services among airports worldwide has reached an average level of roughly 50% today. Since concessions may exert downward pressure on the private aeronautical charge, the question is whether price regulation of private airports has become obsolete. The recent literature on airport concessions suggests that private airport pricing may still be excessive from the social viewpoint. This paper complements this literature by considering (i) two distinct types of concession services called retail services and car rentals, (ii) two-sided demand complementarity between aeronautical and concession services, and (iii) specific airport concession services that are welfare neutral in the sense that the surplus derived from concession services is independent of traveling activities. In this setting, airport price regulation can become obsolete, but concession services of the car-rental type can also increase the benefits of airport price regulation.

Suggested Citation

  • Czerny, Achim I., 2013. "Public versus private airport behavior when concession revenues exist," Economics of Transportation, Elsevier, vol. 2(1), pages 38-46.
  • Handle: RePEc:eee:ecotra:v:2:y:2013:i:1:p:38-46
    DOI: 10.1016/j.ecotra.2012.09.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Achim I. Czerny & Zijun Shi & Anming Zhang, 2015. "Can market power be controlled by regulation of core prices alone?: An empirical analysis of airport demand and car rental price," Tinbergen Institute Discussion Papers 15-041/VIII, Tinbergen Institute.
    2. Sheng, Dian & Li, Zhi-Chun & Xiao, Yi-bin & Fu, Xiaowen, 2015. "Slot auction in an airport network with demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 79-100.
    3. Flores-Fillol, Ricardo & Iozzi, Alberto & Valletti, Tommaso, 2014. "Platform pricing and consumer foresight: The case of airports," Working Papers 2072/242278, Universitat Rovira i Virgili, Department of Economics.
    4. Jiang, Changmin & Zhang, Anming, 2015. "Airport congestion pricing and terminal investment: Effects of terminal congestion, passenger types, and concessionsAuthor-Name: Wan, Yulai," Transportation Research Part B: Methodological, Elsevier, vol. 82(C), pages 91-113.
    5. Brueckner, Jan K. & Lin, Ming Hsin, 2016. "Convenient flight connections vs. airport congestion: Modeling the ‘rolling hub’," International Journal of Industrial Organization, Elsevier, vol. 48(C), pages 118-142.
    6. Tiziana D'Alfonso & Valentina Bracaglia & Yulai Wan, 2015. "Airport cities and multiproduct pricing," DIAG Technical Reports 2015-14, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    7. Lin, Ming Hsin & Mantin, Benny, 2015. "Airport privatization in international inter-hub and spoke networks," Economics of Transportation, Elsevier, vol. 4(4), pages 189-199.
    8. Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2016. "Airport capacity choice under airport-airline vertical arrangements," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 298-309.
    9. Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2013. "Demand uncertainty and airport capacity choice," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 91-104.
    10. Yang, Hangjun & Fu, Xiaowen, 2015. "A comparison of price-cap and light-handed airport regulation with demand uncertainty," Transportation Research Part B: Methodological, Elsevier, vol. 73(C), pages 122-132.
    11. Achim I. Czerny & Anmin Zhang, 2015. "Single-Till versus Dual-Till Regulation of Airports," Tinbergen Institute Discussion Papers 15-049/VIII, Tinbergen Institute.
    12. Kidokoro, Yukihiro & Lin, Ming Hsin & Zhang, Anming, 2016. "A general-equilibrium analysis of airport pricing, capacity, and regulation," Journal of Urban Economics, Elsevier, vol. 96(C), pages 142-155.
    13. Bracaglia, Valentina & D׳Alfonso, Tiziana & Nastasi, Alberto, 2014. "Competition between multiproduct airports," Economics of Transportation, Elsevier, vol. 3(4), pages 270-281.
    14. Adrian Nerja, 2017. "Effects of concession revenue sharing contracts and airline alliances in airport competition," Discussion Papers in Economic Behaviour 0317, University of Valencia, ERI-CES.
    15. Valentina Bracaglia & Tiziana D'Alfonso & Alberto Nastasi, 2014. "Multiproduct airport competition and e-commerce strategies," DIAG Technical Reports 2014-04, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    16. Bettini, Humberto F.A.J. & Oliveira, Alessandro V.M., 2016. "Two-sided platforms in airport privatization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 262-278.
    17. repec:eee:transb:v:100:y:2017:i:c:p:93-114 is not listed on IDEAS
    18. repec:aeg:report:2014-4 is not listed on IDEAS
    19. Czerny, Achim I. & Shi, Zijun & Zhang, Anming, 2016. "Can market power be controlled by regulation of core prices alone? An empirical analysis of airport demand and car rental price," Transportation Research Part A: Policy and Practice, Elsevier, vol. 91(C), pages 260-272.

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