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American Economic Review Vol. 92 No. 5 2002

Airport Congestion When Carriers Have Market Power

Jan K. Brueckner

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.

DOI
10.1257/000282802762024548
Volume
92
Issue
5
Pages
1357-1375
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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