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Preventing competition because of “solidarity”: Rhetoric and reality of airport investments in Spain

Author

Listed:
  • Germà Bel

    (University of Barcelona)

  • Xavier Fageda

    (University of Barcelona)

Abstract

Spain is the only large European country in which airport management is strictly centralized and publicly owned. This peculiar institutional setting prevents competition among Spanish airports, and policy makers and bureaucrats in charge of the system regularly justify it on grounds of interterritorial solidarity. This paper tests whether allocation of investments in airports is effectively based on redistributive purposes, as claimed and looks at other factors to explain such allocation. Our empirical analysis suggests that neither a progressive redistribution target nor the scale economies criterion explain allocation decisions. Instead, we find that political factors have significant influence on the allocation decisions made by the government.

Suggested Citation

  • Germà Bel & Xavier Fageda, 2005. "Preventing competition because of “solidarity”: Rhetoric and reality of airport investments in Spain," Public Economics 0511012, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0511012
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    References listed on IDEAS

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    1. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
    2. Duffy-Deno, Kevin T. & Eberts, Randall W., 1991. "Public infrastructure and regional economic development: A simultaneous equations approach," Journal of Urban Economics, Elsevier, vol. 30(3), pages 329-343, November.
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    5. Germà Bel & Xavier Fageda, 2008. "Getting there fast: globalization, intercontinental flights and location of headquarters," Journal of Economic Geography, Oxford University Press, vol. 8(4), pages 471-495, July.
    6. Worthington, Andrew C & Dollery, Brian E, 1998. "The Political Determination of Intergovernmental Grants in Australia," Public Choice, Springer, vol. 94(3-4), pages 299-315, March.
    7. Cadot, Olivier & Röller, Lars-Hendrik & Stephan, Andreas, 1999. "A Political Economy Model of Infrastructure Allocation: An Empirical Assessment," CEPR Discussion Papers 2336, C.E.P.R. Discussion Papers.
    8. Case, Anne, 2001. "Election goals and income redistribution: Recent evidence from Albania," European Economic Review, Elsevier, vol. 45(3), pages 405-423, March.
    9. Norihiko Yamano & Toru Ohkawara, 2000. "The Regional Allocation of Public Investment: Efficiency or Equity?," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 205-229.
    10. Costa-I-Font, Joan & Rodriguez-Oreggia, Eduardo & Lunapla, Dario, 2003. "Political Competition and Pork-Barrel Politics in the Allocation of Public Investment in Mexico," Public Choice, Springer, vol. 116(1-2), pages 185-204, July.
    11. Behrman, Jere R & Craig, Steven G, 1987. "The Distribution of Public Services: An Exploration of Local Governmental Preferences," American Economic Review, American Economic Association, vol. 77(1), pages 37-49, March.
    12. Johansson, Eva, 2003. "Intergovernmental grants as a tactical instrument: empirical evidence from Swedish municipalities," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 883-915, May.
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    Citations

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    Cited by:

    1. Albalate, Daniel & Bel, Germà & Fageda, Xavier, 2015. "When supply travels far beyond demand: Causes of oversupply in Spain's transport infrastructure," Transport Policy, Elsevier, vol. 41(C), pages 80-89.
    2. Ballart, Xavier & Güell, Casilda, 2015. "Airport ownership and regulation in Spain: Explaining the resistance to change," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 112-118.
    3. Kappeler, Andreas & Solé-Ollé, Albert & Stephan, Andreas & Välilä, Timo, 2013. "Does fiscal decentralization foster regional investment in productive infrastructure?," European Journal of Political Economy, Elsevier, vol. 31(C), pages 15-25.
    4. Germá Bel & Xavier Fageda, 2009. "Factors Explaining Charges in European Airports: Competition, Market Size, Private Ownership and Regulation," Working Papers 2009-31, FEDEA.
    5. Daniel Albalate & Germà Bel & Xavier Fageda, 2013. "“When supply travels far beyond demand: Institutional and regulatory causes of oversupply in Spain’s transport infrastructure”," IREA Working Papers 201312, University of Barcelona, Research Institute of Applied Economics, revised Jun 2013.
    6. repec:eee:touman:v:32:y:2011:i:5:p:1085-1095 is not listed on IDEAS
    7. repec:eee:ecotra:v:13:y:2018:i:c:p:27-35 is not listed on IDEAS
    8. Núñez-Sánchez, Ramón, 2015. "Regional public support to airlines and airports: An unsolved puzzle," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 93-107.
    9. Germá Bel & Xavier Fageda, 2011. "La reforma del modelo de gestión de aeropuertos en España: ¿Gestión conjunta o individual?," Hacienda Pública Española, IEF, vol. 196(1), pages 109-130, january.

    More about this item

    Keywords

    Public Enterprise; Legal monopolies; Air Transportation; Models with Panel Data;

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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