Exclusivity in concession revenue sharing contracts

Adrián Nerja

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the effects of concession revenue sharing contracts by endogenizing the choice of the signatory airline(s). It is shown that an airport finds it profitable to share concession revenues with airlines and this increases both consumer surplus and social welfare. The airport prefers an exclusive agreement when the net per passenger revenue generated on non-aeronautical services at the airport is sufficiently low; it extracts higher payments by exploiting the competition between airlines to become the sole signatory. The level of aeronautical charges, that are regulated, influences the airport's decision and, consequently, the intensity of airline competition. Welfare is higher under a non-exclusive arrangement, which may be in conflict with the airport's decision. The incentive to use these contracts remains under airport competition and revenue sharing increases. With an airline alliance, revenue sharing increases traffic for a large enough degree of cooperation between airlines.

Keywords: Airlines competition; Airport-airline relationship; Vertical collusion; Vertical cooperation; Concession revenue sharing contracts; Vertical contracts (search for similar items in EconPapers)
JEL-codes: L12 L14 L93 R40 (search for similar items in EconPapers)
Date: 2021-08
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/119096/1/MPRA_paper_119096.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119096

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().