Affiliation:
1. Department of Economics and Institute of Government and Public Affairs, University of Illinois at Urbana-Champaign, 1206 South Sixth Street, Champaign, IL 61820.
Abstract
This paper analyzes airport congestion when carriers are nonatomistic, showing how the results of the road-pricing literature are modified when the economic agents causing congestion have market power. The analysis shows that when an airport is dominated by a monopolist, congestion is fully internalized, yielding no role for congestion pricing under monopoly conditions. Under a Cournot oligopoly, however, carriers are shown to internalize only the congestion they impose on themselves. A toll that captures the uninternalized portion of congestion may then improve the allocation of traffic. The analysis is supported by some rudimentary empirical evidence.
Publisher
American Economic Association
Subject
Economics and Econometrics
Cited by
306 articles.
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