Rivalry between airport ancillary and city-center supplies

Achim I. Czerny and Hanxiang Zhang

Transportation Research Part E: Logistics and Transportation Review, 2020, vol. 141, issue C

Abstract: Passengers can buy souvenirs or rent a car at the airport or in the city-center. This paper develops a basic model with unit demands for airport ancillary and city-center demands to derive equilibrium pricing strategies of profit-maximizing airports and city-center companies and evaluates them from the social viewpoint. Passengers are myopic in the sense that only ticket prices matter for flight decisions or foresighted in the sense that non-aeronautical airport and city-center supplies matter for flight decisions, too. We find that the welfare evaluation of equilibrium airport pricing behavior can be independent of whether passengers are myopic or foresighted.

Keywords: Airport privatization; City-center rivalry; Ancillary goods; Myopic passengers; Foresighted passengers (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1016/j.tre.2020.101987

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