Sequential peak-load pricing: the case of airports and airlines

Leonardo J. Basso and Anming Zhang

Canadian Journal of Economics, 2008, vol. 41, issue 3, pages 1087-1119

Abstract: We investigate airport peak-load pricing using a vertical structure of airport and airlines. We find that a profit-maximizing airport would charge higher peak and off-peak runway prices and a higher peak/off-peak price differential than a public airport. Consequently, airport privatization would lead to both fewer total passengers and fewer passengers in the peak period. Although peak-travelling passengers benefit from fewer delays, this low level of peak congestion is not efficient, suggesting that airport privatization cannot be judged based on its effect on congestion alone. We also examine pricing behaviour of a public airport constrained to charge a time independent price.

JEL-codes: L93 H23 L50 (search for similar items in EconPapers)
Date: 2008

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