Airport capacity and congestion when carriers have market power

Anming Zhang (First Author), Yimin Zhang (Participant Author)

Research output: Contribution to journalJournal

118 Citations (Web of Science)

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.
Original languageEnglish
Pages (from-to)229-247
JournalJournal of Urban Economics
Volume60
Issue number2
DOIs
Publication statusPublished - 2006

Corresponding author email

anming.zhang@sauder.ubc.ca

Keywords

  • Airports
  • Capacity investment and financing
  • Congestion toll
  • Market power

Indexed by

  • Scopus
  • SSCI

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