 Hub congestion pricing: Discriminatory passenger chargesMing Hsin Lin and Anming Zhang Economics of Transportation, 2016, vol. 5, issue C, 37-48 Abstract: This paper investigates airport determination of per-flight and per-passenger charges in a hub-spoke network. The hub airport is congestible and it levies a per-flight charge on its carriers and discriminatory per-passenger charges on the local and connecting passengers. Our main results are: (i) the socially optimal per-passenger charges should take the higher congestion contribution by connecting passengers into account, leading to a higher charge on a connecting passenger than on a local passenger; (ii) generally, the social optimum cannot be achieved when the hub only levies a per-flight charge on carriers; (iii) the optimal per-connecting passenger charge should be lower (higher, respectively) than the per-local passenger charge when the per-flight charge is large (small, respectively); and (iv) a profit-maximizing hub can impose lower per-connecting passenger charges as compared to per-local passenger charges, owing to its market power, and this possibility is further strengthened by economies of traffic density. Keywords: Hub-spoke network; Hub congestion; Airport pricing; Per-flight and per-passenger charges; Airport privatization; Economies of traffic density (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:5:y:2016:i:c:p:37-48 DOI: 10.1016/j.ecotra.2016.02.001 Access Statistics for this article Economics of Transportation is currently edited by Mogens Fosgerau and Erik Verhoef More articles in Economics of Transportation from Elsevier |
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