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Congestion management under uncertainty in a two-airport system

Author

Listed:
  • Achim I. Czerny

    (Workgroup for Infrastructure Policy (WIP), Technische Universität Berlin)

Abstract

Congestion pricing and slot constraints can be used to manage airport congestion. We analyze the effect of uncertainty and complementary airport demand on the choice of regulation instruments. Analysis is based on a model including a single airport and uncertain passenger benefits that is gradually extended such that it includes a two-airport system and uncertain congestion costs. We demonstrate that uncertainty favors the use of congestion pricing while demand complementarity can favor the use of slot constraints. However, congestion pricing is always the right choice from a welfare perspective. We show that unregulated monopolistic airports also choose prices as instruments, but, that monopoly charges are too high.

Suggested Citation

  • Achim I. Czerny, 2007. "Congestion management under uncertainty in a two-airport system," Working Papers 2007-01, Center for Network Industries and Infrastructure (CNI).
    • Handle: RePEc:cni:wpaper:2007-01
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    File URL: http://www.cni.tu-berlin.de/fileadmin/documents/RePEc/cni/working_paper/czerny_2007-congestion_management_under_uncertainty_cni_wp_no_2007-01.pdf
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    More about this item

    Keywords

    Airports; slots; uncertainty; demand complementarity; stochastic correlation;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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