Grandfather rights in the market for airport slots

Sieg, Gernot

Grandfather rights are currently used in the European Union to allocate airport slots. This article shows that airports prefer such a use-it-or-lose-it rule to unconditional property rights. Assuming that there are informational asymmetries between airports and air carriers because air carriers have better information on passenger demand, the use-it-or-lose-it rule increases slot use when demand for air transport is low. Airport prots increase and those of the air carriers, together with social welfare, decrease. The prot-maximizing rule is a use-it- g < 1-or-lose-it rule.

Grandfather rights are currently used in the European Union to allocate airport slots. This article shows that airports prefer such a use-it-or-lose-it rule to unconditional property rights. Assuming that there are informational asymmetries between airports and air carriers because air carriers have better information on passenger demand, the use-it-or-lose-it rule increases slot use when demand for air transport is low. Airport prots increase and those of the air carriers, together with social welfare, decrease. The prot-maximizing rule is a use-it- g < 1-or-lose-it rule.

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Sieg, Gernot: Grandfather rights in the market for airport slots. Braunschweig Neue, verbesserte Ausgabe 2009 2009. Institut für Volkswirtschaftslehre.

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