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Airport Privatization and International Competition

20 Pages Posted: 28 Nov 2012  

Toshihiro Matsumura

University of Tokyo - Institute of Social Science

Noriaki Matsushima

Osaka University - Institute of Social and Economic Research (ISER)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2012

Abstract

We provide a simple theoretical model to explain the mechanism whereby the privatization of international airports can improve welfare. The model consists of a downstream (airline) duopoly with two inputs (landings at two airports) and two types of consumers. The airline companies compete internationally. We show that the outcome in which both airports are privatized is always an equilibrium, whereas that in which no airport is privatized is an equilibrium only if the degree of product differentiation is large. We also discuss airport congestion problems within the model framework.

JEL Classification: L33, L13, R48

Suggested Citation

Matsumura, Toshihiro and Matsushima, Noriaki, Airport Privatization and International Competition (December 2012). Japanese Economic Review, Vol. 63, Issue 4, pp. 431-450, 2012. Available at SSRN: https://ssrn.com/abstract=2181850 or http://dx.doi.org/10.1111/j.1468-5876.2012.00584.x

Toshihiro Matsumura (Contact Author)

University of Tokyo - Institute of Social Science ( email )

Hongo 7-3-1
Tokyo, TOKYO 113-0033
Japan

Noriaki Matsushima

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

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