Airport Cities and Multiproduct Pricing

Tiziana D’Alfonso, Valentina Bracaglia and Yulai Wan

Journal of Transport Economics and Policy, 2017, vol. 51, issue 4, 290--312

Abstract: Abstract We study pricing of aviation and non-aviation products in a private monopolistic airport city and model two features. First, non-aviation goods are demanded by both air travellers and non-travellers. Second, the utility from consuming non-aviation goods may depend on whether the consumer travels or not. The impacts of these features on optimal aviation and non-aviation charges would depend on whether individuals foresee the utility of non-aviation goods or not while deciding to buy air tickets. It is profit maximising and welfare enhancing to manipulate the non-aviation product mix in a way that raises the extra surplus gained by travellers.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:tpe:jtecpo:2017:51:4:290--312

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