AIRPORT CONGESTION PRICING AND ITS WELFARE IMPLICATIONS: THE CASE OF VARIABLE PASSENGER TIME COSTS

This paper develops an analytical framework for airport congestion pricing by considering variable passenger time costs. We find that, first, congestion delays will not be fully internalized at the carrier level under different market structures, including those airports dominated by a monopoly airl...

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Bibliographic Details
Published in:Pacific economic review (Oxford, England) England), 2011-02, Vol.16 (1), p.83-102
Main Authors: Yuen, Andrew C. L., Zhang, Anming
Format: Article
Language:English
Subjects:
Airlines
Airports
Business conditions
Federal regulation
Passengers
Pricing policies
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Summary:This paper develops an analytical framework for airport congestion pricing by considering variable passenger time costs. We find that, first, congestion delays will not be fully internalized at the carrier level under different market structures, including those airports dominated by a monopoly airline. Therefore, congestion pricing is necessary regardless of the market structures. Second, although congestion pricing is welfare‐improving, it may not be Pareto‐improving. This might explain why congestion pricing is unpopular in the real world.
ISSN:1361-374X
1468-0106
DOI:10.1111/j.1468-0106.2010.00536.x