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Airport Privatization And International Competition

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  • TOSHIHIRO MATSUMURA
  • NORIAKI MATSUSHIMA

Abstract

We provide a simple theoretical model to explain the mechanism wherebyprivatization of international airports can improve welfare. The model consists of a downstream (airline) duopoly with two inputs (landings at two airports) andtwo types of consumers. The airline companies compete internationally. Using thesimple international duopoly model, we show that the outcome where both airportsare privatized is always an equilibrium while that where no airport is privatized is another equilibrium only if the degree of product differentiation is large.
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  • Toshihiro Matsumura & Noriaki Matsushima, 2012. "Airport Privatization And International Competition," The Japanese Economic Review, Japanese Economic Association, vol. 63(4), pages 431-450, December.
    • Handle: RePEc:bla:jecrev:v:63:y:2012:i:4:p:431-450
    DOI: 10.1111/jere.2012.63.issue-4
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