Opening Ground Handling Markets to Competition: Effects on Welfare

Cristina Barbot
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Cristina Barbot: Formerly at CEFUP, Faculdade de Economia do Porto, 4200-464 Porto, Portugal

Transportation Science, 2012, vol. 46, issue 4, 536-546

Abstract: This paper addresses the case of complementary services with vertical relations, using the example of airport handling activities. Our model investigates the effects on welfare and competitiveness of four handling market situations and confirms Cournot's result on competition in complementary goods, unless there are efficiency gaps. We find that horizontal competition in handling services leads to market foreclosure even if an airline performs self-handling. We add some remarks on regulatory issues, showing that regulation may be pointless or even anticompetitive. We show that Council Directive 96/67/EC, although intending to increase competition, may be anticompetitive and decrease consumer surplus. We develop an empirical study in which some of our theoretical results are confirmed.

Keywords: complementary goods competition; airport handling; vertical relations (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:46:y:2012:i:4:p:536-546

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