Optimal regulation design of airports: Investment incentives and impact of commercial services

David Martimort, Guillaume Pommey and Jerome Pouyet

Transportation Research Part B: Methodological, 2022, vol. 164, issue C, 25-44

Abstract: Modern airports provide commercial services to passengers in addition to aeronautical services to airlines. We analyze the optimal regulation design of the airport when the airport also invests in the quality of its infrastructure. The optimal regulation can be implemented with a price-cap and a subsidy scheme targeted to the investment. We compare that optimal regulation with more constrained scenarios and discuss how commercial services change the need for regulation. We also investigate the consequences of the non-observability of the airport’s investment.

Keywords: Airports; Regulation; Commercial services; Investment (search for similar items in EconPapers)
JEL-codes: L22 L51 L93 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Optimal regulation design of airports: Investment incentives and impact of commercial services (2022)
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DOI: 10.1016/j.trb.2022.07.008

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