Congestion management under uncertainty in a two-airport system

Achim Ingo Czerny ()
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Achim Ingo Czerny: Workgroup for Infrastructure Policy (WIP), Technische Universität Berlin

No 2007-01, Working Papers from Center for Network Industries and Infrastructure (CNI)

Abstract: Congestion pricing and slot constraints can be used to manage airport congestion. We analyze the effect of uncertainty and complementary airport demand on the choice of regulation instruments. Analysis is based on a model including a single airport and uncertain passenger benefits that is gradually extended such that it includes a two-airport system and uncertain congestion costs. We demonstrate that uncertainty favors the use of congestion pricing while demand complementarity can favor the use of slot constraints. However, congestion pricing is always the right choice from a welfare perspective. We show that unregulated monopolistic airports also choose prices as instruments, but, that monopoly charges are too high.

Keywords: Airports; slots; uncertainty; demand complementarity; stochastic correlation (search for similar items in EconPapers)
JEL-codes: D42 L93 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007
New Economics Papers: this item is included in nep-mic and nep-ure
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