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Contracts, Financing Arrangements, and Public Ownership – An Empirical Analysis of the US Airport Governance Model

Author

Listed:
  • Johannes Fuhr

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

Abstract

In contrast to the privatization and regulatory reforms currently underway at European airports, airports in the US remain publicly owned. There, airports negotiate legally binding contracts with airlines and finance large investment projects with revenue bonds. Applying insights from transaction cost economics, we argue that the observed variation in contractual and financing arrangements at US airports corresponds to the parties’ needs for safeguarding and coordination. The case evidence presented reveals that public owners set the framework for private investments and contracting. Airline contracts and capital market control result in efficient investment and act as a check on the cost inefficiency typically linked to public ownership.

Suggested Citation

  • Johannes Fuhr, 2007. "Contracts, Financing Arrangements, and Public Ownership – An Empirical Analysis of the US Airport Governance Model," Working Papers 2007-02, Center for Network Industries and Infrastructure (CNI).
  • Handle: RePEc:cni:wpaper:2007-02
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    More about this item

    Keywords

    Transaction Cost Economics; Contract; Public Ownership; Air Transport;

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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