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Airline Emission Charges: Effects on Airfares, Service Quality, and Aircraft Design

Author

Listed:
  • Jan K. Brueckner

  • Anming Zhang

    (Department of Spacial Economics, VU University, Amsterdam)

Abstract

This paper explores the effect of airline emissions charges on airfares, airline service quality, aircraft design features, and network structure, using a detailed and realistic theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in the effective price of fuel, which is the path by which emissions charges will alter airline choices. The results show that emission charges will raise fares, reduce flight frequency, increase load factors, and raise aircraft fuel efficiency, while having no effect on aircraft size. Given that these adjustments occur in response to the treatment of an emissions externality that is currently unaddressed, they represent efficient changes that move society closer to a social optimum.

Suggested Citation

  • Jan K. Brueckner & Anming Zhang, 2009. "Airline Emission Charges: Effects on Airfares, Service Quality, and Aircraft Design," Working Papers 080916, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:080916
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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