Airport capacity and congestion when carriers have market power

By Anming Zhang, Yimin Zhang. 2006

225 citations recorded by the source corpus.

Abstract Several authors recently pointed out that congestion pricing has no (or only partial) place at an airport when carriers have market power, since carriers themselves will internalize congestion. This article investigates the impact of such self-internalization on the airport, as this would effectively deprive the airport of an important source of funds for its capacity investment. We find that airline market structure has no impact on airport capacity and congestion for a welfare-maximizing airport that receives public subsidy, while somewhat surprisingly, both a private airport and a budget-constrained public airport would tend to over-invest in capacity when carriers have market power.

Subfields: Economics and Econometrics, Strategy and Management, Transportation

View Paper: https://www.semanticscholar.org/paper/382084551e56f0ba819eaf9bde784c9de8ba3ffe

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Citations in the corpus

Price vs. quantity-based approaches to airport congestion management (2009, background): “3See Pels and Verhoef (2004), Zhang and Zhang (2006), Basso and Zhang (2007), and Morrison and Winston (2007).”
Airport Deregulation: Effects on Pricing and Capacity (2008, background): “7 In parallel but independent work, Zhang and Zhang (2006) analyzed a vertical structure of airlines and airports somewhat similar to the one proposed here.”
Air transport and economic growth: a review of the impact mechanism and causal relationships (2020, background): “Capacity expansion at a congested airport would have a pervasive impact on the existing traffic equilibrium in the aviation system (Brueckner, 2003; Oum, Zhang, & Zhang, 2004; Zhang & Zhang, 2003, 2006, 2010).”
REVENUE SHARING WITH MULTIPLE AIRLINES AND AIRPORTS (2010, background): “10 Recent studies on airport pricing and capacity investment that have incorporated imperfect competition of air carriers at an airport (e.g., Brueckner, 2002; Pels and Verhoef, 2004; Zhang and Zhang, 2006; Basso, 2008) have assumed Cournot behavior.”
Congestible facility rivalry in vertical structures (2007, unknown): “The issue of budget adequacy is further discussed by Zhang and Zhang (2006) for the single-airport case and by Basso (2005) in the context two distant airports, but the conclusions there apply to this competingfacilities case as well: two-part tariffs, or cost-recovery two-part tariffs if the…”