Internalization of Airport Congestion: A Network Analysis
The likely resurgence of air traffic in the U.S. means that airport congestion is a problem that must soon be confronted by policy makers. As part of their policy response, it is probable that some form of congestion pricing will be imposed at selected U.S. airports in the relatively near future. The theory developed in this paper, which extends the results of Brueckner (2002), provides an important guide for the formulation of congestion pricing rules. In particular, the theory says that the congestion tolls levied on the various airlines at a particular airport should generally be different, with the tolls being inversely related to a carrier’s airport flight share. Internalization of airport congestion is the reason for this inverse relationship. In operating another peak flight, a carrier takes account of the congestion damage imposed on the other flights it operates. If these flights account for a large share of the airport’s traffic, then most of the congestion created by the additional flight is internalized, justifying a low toll. By contrast, if the carrier operates only a few of the airport’s flights, then little internalization occurs, and a high toll is needed to force the carrier to take into account the congestion damage it causes. The resulting flight-share rule is easy to implement, and it could help policymakers design proper toll systems at U.S. airports.
|Date of creation:||2002|
|Date of revision:|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
- Eric Pels & Erik Verhoef, 2003.
"The Economics of Airport Congestion Pricing,"
Tinbergen Institute Discussion Papers
03-083/3, Tinbergen Institute.
- 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.
- 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.
- Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
- Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December.
- Daniel, Joseph I., 2001. "Distributional Consequences of Airport Congestion Pricing," Journal of Urban Economics, Elsevier, vol. 50(2), pages 230-258, September.
- Levine, Michael E, 1969. "Landing Fees and the Airport Congestion Problem," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 79-108, April.
- 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.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_756. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If references are entirely missing, you can add them using this form.