Abstract
Modern airports provide commercial services to passengers in addition to aeronautical services to airlines. We analyze the optimal regulation design of the airport when the airport also invests in the quality of its infrastructure. The optimal regulation can be implemented with a price-cap and a subsidy scheme targeted to the investment. We compare that optimal regulation with more constrained scenarios and discuss how commercial services change the need for regulation. We also investigate the consequences of the non-observability of the airport’s investment.
JEL codes
- L51: Economics of Regulation
- L93: Air Transportation
- L22: Firm Organization and Market Structure
Reference
David Martimort, Guillaume Pommey, and Jérôme Pouyet, “Optimal regulation design of airports: Investment incentives and impact of commercial services”, Transportation Research Part B: Methodological, vol. 164, October 2022, pp. 25–44.
Published in
Transportation Research Part B: Methodological, vol. 164, October 2022, pp. 25–44