Atomistic congestion tolls at concentrated airports? Seeking a unified view in the internalization debate
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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- Jan K. Brueckner, 2002.
"Internalization of Airport Congestion: A Network Analysis,"
CESifo Working Paper Series
756, CESifo Group Munich.
- Brueckner, Jan K., 2005. "Internalization of airport congestion: A network analysis," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 599-614, September.
- Pels, Eric & Verhoef, Erik T., 2004.
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- Joseph I. Daniel & Katherine Thomas Harback, 2005.
"(When) Do Hub Airlines Internalize Their Self-Imposed Congestion Delays?,"
05-08, University of Delaware, Department of Economics.
- 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.
- Christopher Mayer & Todd Sinai, .
"Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why All Delays Are Not Evil,"
Zell/Lurie Center Working Papers
393, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
- 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.
- Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
- Daniel, Joseph I., 2001. "Distributional Consequences of Airport Congestion Pricing," Journal of Urban Economics, Elsevier, vol. 50(2), pages 230-258, September.
- Basso, Leonardo J. & Zhang, Anming, 2007. "Congestible facility rivalry in vertical structures," Journal of Urban Economics, Elsevier, vol. 61(2), pages 218-237, March.
- Forbes, Silke J., 2008. "The effect of air traffic delays on airline prices," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1218-1232, September.
- 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.
- 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.
- 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.
- 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.
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