Airport Congestion When Carriers Have Market Power

Jan Brueckner

American Economic Review, 2002, vol. 92, issue 5, 1357-1375

Abstract: This paper analyzes airport congestion when carriers are nonatomistic, showing how the results of the road-pricing literature are modified when the economic agents causing congestion have market power. The analysis shows that when an airport is dominated by a monopolist, congestion is fully internalized, yielding no role for congestion pricing under monopoly conditions. Under a Cournot oligopoly, however, carriers are shown to internalize only the congestion they impose on themselves. A toll that captures the uninternalized portion of congestion may then improve the allocation of traffic. The analysis is supported by some rudimentary empirical evidence.

Date: 2002
Note: DOI: 10.1257/000282802762024548
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Citations: View citations in EconPapers (272)

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