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(When) Do hub airlines internalize their self-imposed congestion delays?

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  • Daniel, Joseph I.
  • Harback, Katherine Thomas

Abstract

Specification tests using stochastic bottleneck models of airport congestion investigate whether dominant airlines internalize or ignore self-imposed delays at twenty-seven major US airports. Data on flight times determine the airport's landing and takeoff delays for every minute of operation during peak travel days. Dynamic congestion functions based on stochastic-queuing theory separately identify delays that aircraft experience directly, impose internally on their airline's other aircraft, or impose externally on other airlines. Specification tests largely reject internalization and fail to reject non-internalization by dominant airlines. Optimal pricing should value all time using non-dominant aircraft time values and treat all delays as external.

Suggested Citation

  • Daniel, Joseph I. & Harback, Katherine Thomas, 2008. "(When) Do hub airlines internalize their self-imposed congestion delays?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 583-612, March.
  • Handle: RePEc:eee:juecon:v:63:y:2008:i:2:p:583-612
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    References listed on IDEAS

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    1. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
    2. Daniel, Joseph I, 1995. "Congestion Pricing and Capacity of Large Hub Airports: A Bottleneck Model with Stochastic Queues," Econometrica, Econometric Society, vol. 63(2), pages 327-370, March.
    3. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
    4. Christopher Mayer & Todd Sinai, 2003. "Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why Not All Delays Are Evil," American Economic Review, American Economic Association, vol. 93(4), pages 1194-1215, September.
    5. Daniel, Joseph I. & Pahwa, Munish, 2000. "Comparison of Three Empirical Models of Airport Congestion Pricing," Journal of Urban Economics, Elsevier, vol. 47(1), pages 1-38, January.
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    More about this item

    Keywords

    Airport congestion pricing Stochastic queuing Bottleneck model;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • D6 - Microeconomics - - Welfare Economics

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