When to regulate airports : a simple rule

Kratzsch, Uwe; Sieg, Gernot

Landing fees at airports are regulated almost all over the world since airports are assumed to abuse their market power. We find that monopolistic airports have an incentive to restrain landing fees when they generate additional non-aviation revenues and that the optimal landing fee decreases in the degree of complementarity of aviation and non-aviation. Furthermore, we show that monopolistic airports will not have an incentive to abuse their market power anymore so that a price regulation becomes inappropriate as soon as non-aviation revenues increase above 50% of all airport revenues.

Landing fees at airports are regulated almost all over the world since airports are assumed to abuse their market power. We find that monopolistic airports have an incentive to restrain landing fees when they generate additional non-aviation revenues and that the optimal landing fee decreases in the degree of complementarity of aviation and non-aviation. Furthermore, we show that monopolistic airports will not have an incentive to abuse their market power anymore so that a price regulation becomes inappropriate as soon as non-aviation revenues increase above 50% of all airport revenues.

Cite

Citation style:

Kratzsch, Uwe / Sieg, Gernot: When to regulate airports. a simple rule. Braunschweig 2009. Institut für Volkswirtschaftslehre.

Access Statistic

Total:
Downloads:
Abtractviews:
Last 12 Month:
Downloads:
Abtractviews:

show details

Rights

Use and reproduction:
All rights reserved

Export