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A new era for airport regulators through capacity investments

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  • Martín, Juan Carlos
  • Pilar Socorro, M.

Abstract

Private and public airports' optimal actions may not coincide. While private airports usually pursue profit maximization, publicly owned airports look for maximum social welfare. Thus, the prices charged by private airports may differ from the socially optimal charges and public intervention may be needed. In this paper, we analyze airport charges when an increase in frequency produces positive or negative externalities and carriers have market power. We use the methodology of game theory to show that there may exist a level of capacity for which private and social objectives coincide, so no price regulation is needed. Thus, the usual role of regulators and planners could be modified in order to decide the appropriate capacity investments for which airport regulation is no longer necessary.

Suggested Citation

  • Martín, Juan Carlos & Pilar Socorro, M., 2009. "A new era for airport regulators through capacity investments," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(6), pages 618-625, July.
    • Handle: RePEc:eee:transa:v:43:y:2009:i:6:p:618-625
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    References listed on IDEAS

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    Cited by:

    1. de Rus, Ginés & Socorro, M. Pilar, 2019. "Pricing and investment in alternative transport infrastructures," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 96-107.
    2. Adler, Nicole & Liebert, Vanessa, 2014. "Joint impact of competition, ownership form and economic regulation on airport performance and pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 64(C), pages 92-109.
    3. Pierre Picard & Alessandro Tampieri & Xi Wan, 2023. "Deregulation and Efficiency in Slot-Constrained Airports," DEM Discussion Paper Series 23-14, Department of Economics at the University of Luxembourg.
    4. Pierre M. Picard & Alessandro Tampieri & Xi Wan, 2022. "Are Deregulated Airports More Efficient?," Working Papers - Economics wp2022_18.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    5. Adler, Nicole & Gellman, Aaron, 2012. "Strategies for managing risk in a changing aviation environment," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 24-35.
    6. Socorro, M. Pilar & Betancor, Ofelia, 2011. "Optimality of environmental policies in air transport markets and changes in the schedule delay: A theoretical approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(9), pages 850-860, November.
    7. Anna Bottasso & Maurizio Conti, 2010. "An Assessment on the Cost Structure of the UK Airport Industry: Ownership Outcomes and Long Run Cost Economies," Working papers 13, Former Department of Economics and Public Finance "G. Prato", University of Torino.
    8. Ishii, Masahiro & Lee, Paul Tae-Woo & Tezuka, Koichiro & Chang, Young-Tae, 2013. "A game theoretical analysis of port competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 49(1), pages 92-106.

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