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Pricing the major US hub airports

  • Daniel, Joseph I.
  • Harback, Katherine Thomas
Registered author(s):

    Implementing congestion pricing at 27 major US airports would reduce delays by 13 passenger-years and 1000 aircraft-hours every day, saving 3-5 million dollars daily. Chicago and Atlanta would save about 1000 dollars per aircraft. Airport revenues would increase about 11 million dollars daily. A bottleneck model with stochastic queues estimates substantial welfare gains whether or not airlines internalize self-imposed delays. Erroneously imposing fees from the non-internalizing specification on internalizing airlines, however, would be a costly mistake. The model calculates equilibrium traffic rates, queuing delays, layover times, connection times, and congestion fee schedules by minute of the day.

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

    Volume (Year): 66 (2009)
    Issue (Month): 1 (July)
    Pages: 33-56

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    Handle: RePEc:eee:juecon:v:66:y:2009:i:1:p:33-56
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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    1. Richard Arnott & Andre de Palma & Robin Lindsey, 1985. "Economics of a Bottleneck," Working Papers 636, Queen's University, Department of Economics.
    2. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
    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. Omosigho, S. E. & Worthington, D. J., 1988. "An approximation of known accuracy for single server queues with inhomogeneous arrival rate and continuous service time distribution," European Journal of Operational Research, Elsevier, vol. 33(3), pages 304-313, February.
    5. 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.
    6. Carlin, Alan & Park, Rolla Edward, 1970. "Marginal Cost Pricing of Airport Runway Capacity," American Economic Review, American Economic Association, vol. 60(3), pages 310-19, June.
    7. 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.
    8. Oum, Tae Hoon & Zhang, Yimin, 1990. "Airport pricing : Congestion tolls, lumpy investment, and cost recovery," Journal of Public Economics, Elsevier, vol. 43(3), pages 353-374, December.
    9. 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.
    10. 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.
    11. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
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