Cost-Based Versus Incentive Regulation for Airports

Eric Pels ()
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Eric Pels: VU University, School of Business and Economics

Chapter Chapter 5 in Economic Regulation of Urban and Regional Airports, 2023, pp 111-123 from Springer

Abstract: Abstract This chapter contributes to the discussion on the most suitable form of airport regulation by focusing on the impact of airline behavior and the international focus of airports on the choice of regulatory scheme. Different objectives are discussed (welfare maximization, rent control, or efficient production), and the chapter touches upon the question of high- or low-powered regulation as the most suitable method to achieve said objectives. Low-powered airport regulation potentially leaves the rents to airlines, and not necessarily the final consumers. High-powered regulation leaves the rents with the local airport rather than with the international airlines, which may be politically convenient. If airlines are active in competitive markets, low-powered regulation leaves rents to passengers, and if the majority of these passengers is foreign, this scheme may also not be politically feasible.

Keywords: Rate-of return regulation; Price-cap regulation; Incentive regulation; Double marginalization; Policy competition (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:adspcp:978-3-031-20341-1_5

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DOI: 10.1007/978-3-031-20341-1_5

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