The impact of airport competition on technical efficiency: A Stochastic Frontier Analysis applied to Italian airports

Paolo Malighetti, Gianmaria Martini, Davide Scotti and Nicola Volta

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate how the intensity of competition among airports affects their technical efficiency by computing airports’ markets on the basis of a potential demand approach. We find that the intensity of competition has a negative impact on airports’ efficiency in Italy during the 2005–2008 period. This implies that airports belonging to a local air transportation system where competition is strong exploit their inputs less intensively than do airports with local monopoly power. Furthermore, we find that public airports are more efficient than private and mixed ones. Since public airports take into account the positive externalities created by air transportation in the local economy, they are more willing to subsidize airlines in developing the airports’ connections. Hence, policy makers should provide incentives to implement airports’ specialization in local systems where competition is strong. Moreover, when regulating airport charges, they should take into account the impact of the above externalities.

Keywords: Airport efficiency; stochastic distance function; airport competition (search for similar items in EconPapers)
JEL-codes: L11 L59 L93 (search for similar items in EconPapers)
Date: 2010-05
New Economics Papers: this item is included in nep-com, nep-eff and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The impact of airport competition on technical efficiency: A stochastic frontier analysis applied to Italian airport (2012)
Working Paper: The impact of airport competition on technical efficiency: A Stochastic Frontier Analysis applied to Italian airports (2010)
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