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Why Regulate Airports? A Re-examination of the Rationale for Airport Regulation

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  • Darryl Biggar

Abstract

What is the primary rationale for the regulation of airport take-off and landing charges? The conventional economic response focuses on the potential to exercise market power, resulting in the economic harm known as deadweight loss. But this conventional view does a poor job of explaining the observed actions of regulators and the concerns of airport users. In this paper, I argue that the primary rationale for regulation of airports is not the minimisation of deadweight loss, but the protection and promotion of sunk complementary investments by airport users. This approach explains the key patterns of airport regulation that we observe in practice. © 2012 LSE and the University of Bath

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  • Darryl Biggar, 2012. "Why Regulate Airports? A Re-examination of the Rationale for Airport Regulation," Journal of Transport Economics and Policy, University of Bath, vol. 46(3), pages 367-380, September.
    • Handle: RePEc:tpe:jtecpo:v:46:y:2012:i:3:p:367-380
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    Cited by:

    1. Lohmann, Gui & Trischler, Jakob, 2017. "Licence to build, licence to charge? Market power, pricing and the financing of airport infrastructure development in Australia," Transport Policy, Elsevier, vol. 59(C), pages 28-37.
    2. Kenneth Button, 2020. "Studying the empirical implications of the liberalization of airport markets," Competition and Regulation in Network Industries, , vol. 21(3), pages 223-243, September.
    3. Biggar, Darryl, 2022. "Seven outstanding issues in energy network regulation," Energy Economics, Elsevier, vol. 115(C).
    4. Niemeier, Hans-Martin, 2021. "Is economics good for aviation policy? Some problems in bridging the gap between theory and policy," Journal of Air Transport Management, Elsevier, vol. 96(C).
    5. Littlechild, Stephen, 2018. "Economic regulation of privatised airports: Some lessons from UK experience," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 100-114.
    6. Kistler, Beat & Trischler, Jakob & Lohmann, Gui, 2018. "Passenger representation within the light-handed regulation – Insights from the Australian air transport market," Transport Policy, Elsevier, vol. 71(C), pages 106-115.
    7. Leroux, Anke & Söderberg, Magnus, 2023. "Network Regulation under electoral competition," Energy Economics, Elsevier, vol. 120(C).

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