Airport congestion and capacity when carriers are asymmetric

Ming Hsin Lin

International Journal of Industrial Organization, 2019, vol. 62, issue C, 273-290

Abstract: This study investigates pricing and capacity investment for a congested airport served by multiple carriers. Removing the symmetric carrier assumption, when airlines’ market shares are potentially asymmetric, the socially non-discriminatory optimal charge rule should include an additional term that corrects the distortion caused by pricing itself. The first-best outcome cannot be achieved, and the airport overinvests under the non-discriminatory optimal charge. However, if the airport levies discriminatory charges respective to carriers, the first-best outcome can be achieved and capacity investment is socially efficient under discriminatory optimal charges. In addition, the discriminatory optimal charges levied on a carrier with a larger (smaller) market share are lower (higher).

Keywords: Airport congestion; Asymmetric carriers; Discriminatory/Non-discriminatory charges; Capacity investment (search for similar items in EconPapers)
JEL-codes: L5 L9 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:62:y:2019:i:c:p:273-290

DOI: 10.1016/j.ijindorg.2018.07.006

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