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Airport complementarity: Private vs. government ownership and welfare gravitation

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  • Mantin, Benny

Abstract

We study the effects of airport ownership (private vs. government) on welfare in the presence of airport complementarity, where each airport is located in a different country. Considering Cournot competition in the airline market, the unique Nash equilibrium is such that the two countries privatize their airports, even though both countries are better off, from a welfare perspective, with public (government-owned) airports. Considering a differentiated Bertrand competition in the airline market, the same result prevails if the cross price elasticities are sufficiently high, otherwise the symmetric government-ownership of airports may also be a Nash equilibrium.

Suggested Citation

  • Mantin, Benny, 2012. "Airport complementarity: Private vs. government ownership and welfare gravitation," Transportation Research Part B: Methodological, Elsevier, vol. 46(3), pages 381-388.
    • Handle: RePEc:eee:transb:v:46:y:2012:i:3:p:381-388
    DOI: 10.1016/j.trb.2011.10.001
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    References listed on IDEAS

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