Airport Congestion When Carriers Have Market Power
- (pp. 1357-1375)
Abstract
This paper analyzes airport congestion when carriers are nonatomistic, showing how the results of the road-pricing literature are modified when the economic agents causing congestion have market power. The analysis shows that when an airport is dominated by a monopolist, congestion is fully internalized, yielding no role for congestion pricing under monopoly conditions. Under a Cournot oligopoly, however, carriers are shown to internalize only the congestion they impose on themselves. A toll that captures the uninternalized portion of congestion may then improve the allocation of traffic. The analysis is supported by some rudimentary empirical evidence.Citation
Brueckner, Jan, K. 2002. "Airport Congestion When Carriers Have Market Power ." American Economic Review, 92 (5): 1357-1375. DOI: 10.1257/000282802762024548JEL Classification
- L93 Air Transportation
- L13 Oligopoly and Other Imperfect Markets
- L98 Industry Studies: Utilities and Transportation: Government Policy