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Hub and Spoke Airport Networks and State Airport Infrastructure Spillovers: A Spatial Econometrics Approach

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  • Cohen, Jeffrey P.
  • Morrison Paul, Catherine J.

Abstract

In recent years, many hubs in the highly interdependent U.S. air transport network have become congested, leading to delays for business travelers and freight shipments. Recent events in this industry may have temporarily reduced this congestion, but contributed to other types of disruptions. Since delays and disruptions at one node of the network exacerbate problems throughout the system, airport infrastructure expansion to enhance traffic flows and security in large hubs may confer substantive spillover benefits in the form of travel-time savings and reliability. This may in turn translate into increased worker productivity and shipping efficiency, and thus lower costs, for manufacturing firms. In this paper we evaluate the impacts of such spillovers, by applying spatial econometrics techniques to a cost function framework, using state-level data on airport and highway infrastructure, and manufacturing production. We find that increasing own-state airport infrastructure tends to generate costsaving benefits for the state’s manufacturing industry, primarily due to non-production laborand materials-savings. However, airport expansion in connected hubs has an even greater impact, implying an important externality component of such investment. Also, unless airport expansion is accompanied by highway infrastructure investment, congestion seems to counteract the associated benefits, especially in large-hub states with less than 5 percent of the nation’s passenger enplanements.

Suggested Citation

  • Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2001. "Hub and Spoke Airport Networks and State Airport Infrastructure Spillovers: A Spatial Econometrics Approach," Working Papers 190900, University of California, Davis, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucdavw:190900
    DOI: 10.22004/ag.econ.190900
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    References listed on IDEAS

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    1. Douglas Holtz-Eakin & Amy Schwartz, 1995. "Spatial productivity spillovers from public infrastructure: Evidence from state highways," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(3), pages 459-468, October.
    2. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "State Infrastructure and Productive Performance," American Economic Review, American Economic Association, vol. 86(5), pages 1095-1111, December.
    3. Jeffrey P. Cohen, 2002. "Reciprocal State and Local Airport Spending Spillovers and Symmetric Responses to Cuts and Increases in Federal Airport Grants," Public Finance Review, , vol. 30(1), pages 41-55, January.
    4. Harry H. Kelejian & Dennis P. Robinson, 1997. "Infrastructure Productivity Estimation And Its Underlying Econometric Specifications: A Sensitivity Analysis," Papers in Regional Science, Wiley Blackwell, vol. 76(1), pages 115-131, January.
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    6. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2001. "Spatial And Supply/Demand Agglomeration Economies: An Evaluation Of State-And-Industry-Linkages In The U.S. Food System," Working Papers 11982, University of California, Davis, Department of Agricultural and Resource Economics.
    7. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2001. "Public Infrastructure Investments, Costs, and Inter- State Spatial Spillovers in U.S. Manufacturing: 1982-1996," Working Papers 190898, University of California, Davis, Department of Agricultural and Resource Economics.
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