An analysis of an airport–airline relationship under a risk sharing contract

Katsuya Hihara

Transportation Research Part E: Logistics and Transportation Review, 2012, vol. 48, issue 5, 978-992

Abstract: This paper analyzes a risk sharing incomplete contract under which an airline agrees to serve an airport in exchange for payment to/from the airport based on the difference between a realized and a target load factor. The key results are that we specified the relevant conditions on payments and utilities under which the incomplete contract can overcome the under-effort problem and achieve the efficient utility levels. These results are numerically illustrated by showing the impacts of the project prospect deterioration and the uncertainty increases on effort and utility levels.

Keywords: Airport–airline vertical relationship; Load Factor Guarantee Mechanism; Joint-venture type trade; Incomplete contract; Hold-up problem (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:48:y:2012:i:5:p:978-992

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DOI: 10.1016/j.tre.2012.03.002

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