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Scale and (Quasi) Scope Economies in Airport Technology: an Application to UK Airports

Anna Bottasso (), Maurizio Conti () and Davide Vannoni ()

No 56, Working papers from Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

Abstract: In this study we consider a sample of the largest UK airports in order to estimate, for the first time for this sector, a multiproduct cost function using a flexible technology that nests most of the specifications commonly employed in the empirical literature. Another novelty of this work is that we provide estimates of (quasi) scope economies for the airport industry. Our main results suggest the existence of (quasi) scope economies that tend to decline with the size of the airport. The finding on quasi scope economies coupled with a set of cost complementarity tests suggest that cost savings mainly arise from the joint provision of services for national and international passengers and, to a lesser extent, to the addition of cargo transport activities; in turn, the production of non aeronautical services seems to be characterized by anti-cost complementarities. Finally, we confirm previous findings in the literature that global economies of scale are exhausted at about five million passengers in the case of the UK airport industry.

Keywords: Scope and Scale Economies; Composite Cost Function; Airports. (search for similar items in EconPapers)
JEL-codes: L93 L23 C3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-tre
Date: 2018-06
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http://www.bemservizi.unito.it/repec/tur/wpapnw/m56.pdf First version, 2018 (application/pdf)

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Journal Article: Scale and (quasi) scope economies in airport technology. An application to UK airports (2019) Downloads
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