Strategic Reactions of Airlines to the European Trading Scheme

Estelle Malavolti () and Marion Podesta ()
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Estelle Malavolti: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, LEEA - ENAC - Laboratoire d'Economie et d'Econométrie de l'Aérien - ENAC - Ecole Nationale de l'Aviation Civile

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Abstract: The air transport sector entered the European Trading Scheme in 2012 (for the intra-European flights). The regulation of CO2 emissions is costly for airlines and modifies the organization of their market. Our paper proposes an economic analysis in which the regulation but also CO2 emissions of airlines are modelled. We show that, in a perfect competition setting, the difference between passengers carried without regulation and when the regulation is put in place, is negative for the best-performing planes. However, for the less efficient aircraft, the implementation of the regulation entails a reduction of airlines activity, and therefore a low level of carbon emissions.

Keywords: Transport; Regulation; European Trading Scheme (search for similar items in EconPapers)
Date: 2015-08-01
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Published in Transportation Research Procedia, 2015, Current practices in transport: appraisal methods, policies and models – 42nd European Transport Conference Selected Proceedings, 8, pp.103-113. ⟨10.1016/j.trpro.2015.06.046⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01184863

DOI: 10.1016/j.trpro.2015.06.046

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