Infrastructure, Competition Regimes and Air Transport Costs: Cross Country Evidence

Alejandro Micco () and Tomas Serebrisky

No 1916, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: The relevance of transport costs has increased as liberalization continues to reduce artificial barriers to trade. Countries need to adopt policies to 'get closer' to global markets. Can improvements in infrastructure and regulation reduce transport costs? Is it worthwhile to implement policies designed to increase competition in transport markets? Focusing on air transport, which has increased its share in US imports from 24 percent in 1990 to 35 percent in 2000, this paper quantifies the effects of infrastructure, regulatory quality and liberalization of air cargo markets on transport costs. During the 1990s, the US implemented a series of Open Skies agreements, which have provided a unique opportunity to assess the effect on prices of a change in the competition regime. We find that infrastructure, quality of regulation and competition matter. In our sample, an improvement in airport infrastructure from the 25th to 75th percentiles reduces air transport costs 15 percent. A similar improvement in the quality of regulation reduces air transport costs 14 percent. In addition, Open Skies agreements reduce air transport costs by 8 percent.

Keywords: WP-510 (search for similar items in EconPapers)
JEL-codes: F43 L4 L40 L41 L42 L43 L44 L49 L93 (search for similar items in EconPapers)
Date: 2004-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Infrastructure, Competition Regimes and Air Transport Costs: Cross Country Evidence (2004)
Working Paper: Infrastructure, Competition Regimes and Air Transport Costs: Cross Country Evidence (2004)
Working Paper: Infrastructure, competition regimes, and air transport costs: cross-country evidence (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:1916

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