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Note: Direct Impact of an Airport on Travelers' Expenditures: Methodology and Application

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  • Joseph S DeSalvo

Abstract

Economic impact studies overestimate the direct impact of an airport on travelers' expenditures. This occurs for two reasons. First, impact studies assume that the number of visitors traveling to the local area via the airport would fall to zero in the absence of the airport. Second, impact studies implicitly assume that local residents would continue to travel outside the local area in the same numbers as when the local airport is available. In other words, it is assumed that the demand for travel into the local area by visitors is perfectly elastic with respect to the time and money costs of travel, while the demand for travel by local residents is perfectly inelastic with respect to these variables. This paper develops a methodology that avoids both of these sources of error by explicitly incorporating air travel demand into the analysis. The methodology is applied to Tampa International Airport for the year 1996. It is shown that using the standard methodology would have resulted in an estimate of direct impacts sixteen times the size of the estimate made by using the methodology of this paper.

Suggested Citation

  • Joseph S DeSalvo, 2002. "Note: Direct Impact of an Airport on Travelers' Expenditures: Methodology and Application," Growth and Change, Wiley Blackwell, vol. 33(4), pages 485-496, September.
    • Handle: RePEc:bla:growch:v:33:y:2002:i:4:p:485-496
    DOI: 10.1111/1468-2257.00207
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    References listed on IDEAS

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    1. Joseph S. DeSalvo & Debra L. Fuller, 1995. "The Role Of Price Elasticities Of Demand In The Economic Impact Of A Port," The Review of Regional Studies, Southern Regional Science Association, vol. 25(1), pages 13-35, Summer.
    2. De Vany, Arthur, 1974. "The Revealed Value of Time in Air Travel," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 77-82, February.
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