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Market structure, countervailing power and price discrimination: the case of airports

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  • Haskel, J
  • Valletti, T
  • Iozzi, A

Abstract

A number of interesting policy questions have arisen regarding airport landing fees. For example, what is the impact of joint ownership of airports? Does airline countervailing power stop airports raising fees? Should airports be prohibited, as an EU directive intends, from charging differential input prices to airlines? We set out a model of upstream airports and downstream airlines with varying countervailing power and pricing structures. Our major findings are: (a) an increase in upstream concentration or in the degree of differentiation between airports always increases the landing fee; (b) the effect of countervailing power, via an increase in downstream concentration, lowers landing fees, but typically does not pass through to consumers; (c) with Cournot competition, uniform landing fees are always higher than discriminatory fees.
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  • Haskel, J & Valletti, T & Iozzi, A, 2013. "Market structure, countervailing power and price discrimination: the case of airports," Working Papers 6857, Imperial College, London, Imperial College Business School.
    • Handle: RePEc:imp:wpaper:6857
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    4. Álvarez-Sanjaime, Óscar & Cantos-Sánchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2020. "A three-stage competition game in an air transport network under asymmetric valuation of flight frequencies," Economics of Transportation, Elsevier, vol. 21(C).
    5. Pavlyuk, Dmitry, 2012. "Airport Benchmarking and Spatial Competition: a Critical Review," MPRA Paper 43391, University Library of Munich, Germany.
    6. Kenneth Button, 2020. "Studying the empirical implications of the liberalization of airport markets," Competition and Regulation in Network Industries, , vol. 21(3), pages 223-243, September.
    7. Akio Kawasaki, 2020. "Airport pricing strategy by hub airports: does the number of local airports matter?," Asia-Pacific Journal of Regional Science, Springer, vol. 4(3), pages 835-857, October.
    8. Andrey E. Shastitko & Natalya S. Pavlova, 2023. "Assessing the boundaries of the airport services market: Grounds for tariff deregulation," Upravlenets, Ural State University of Economics, vol. 14(5), pages 2-15, November.
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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