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Atomistic congestion tolls at concentrated airports? Seeking a unified view in the internalization debate

  • Brueckner, Jan K.
  • Van Dender, Kurt

The goal of this paper is to bring some unity to the theoretical side of the debate on internalization of airport congestion by showing that all the literature's theoretical results can be derived within one simple and unified framework. The analysis starts by replicating the results of Brueckner [Brueckner, J.K., 2002. Airport congestion when carriers have market power. American Economic Review 92, 1357-1375], who showed that, because airlines behaving in Cournot fashion internalize congestion, they should be charged low congestion tolls. The analysis then validates the findings of Daniel [Daniel, J.I., 1995. Congestion pricing and capacity of large hub airports: A bottleneck model with stochastic queues. Econometrica 63, 327-370], who argued that larger atomistic tolls are required in a model where a Stackelberg leader interacts with competitive fringe airlines. However, it is shown that this result only holds approximately when the carriers' outputs are imperfect substitutes.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 64 (2008)
Issue (Month): 2 (September)
Pages: 288-295

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Handle: RePEc:eee:juecon:v:64:y:2008:i:2:p:288-295
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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  1. Daniel, Joseph I., 2001. "Distributional Consequences of Airport Congestion Pricing," Journal of Urban Economics, Elsevier, vol. 50(2), pages 230-258, September.
  2. Christopher Mayer & Todd Sinai, 2002. "Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why All Delays Are Not Evil," NBER Working Papers 8701, National Bureau of Economic Research, Inc.
  3. Steven A. Morrison & Clifford Winston, 2007. "Another Look at Airport Congestion Pricing," American Economic Review, American Economic Association, vol. 97(5), pages 1970-1977, December.
  4. Zhang, Anming & Zhang, Yimin, 2006. "Airport capacity and congestion when carriers have market power," Journal of Urban Economics, Elsevier, vol. 60(2), pages 229-247, September.
  5. Jan K. Brueckner, 2002. "Internalization of Airport Congestion: A Network Analysis," CESifo Working Paper Series 756, CESifo Group Munich.
  6. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
  7. 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.
  8. Pels, Eric & Verhoef, Erik T., 2004. "The economics of airport congestion pricing," Journal of Urban Economics, Elsevier, vol. 55(2), pages 257-277, March.
  9. Basso, Leonardo J. & Zhang, Anming, 2007. "Congestible facility rivalry in vertical structures," Journal of Urban Economics, Elsevier, vol. 61(2), pages 218-237, March.
  10. 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 327-70, March.
  11. 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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