20 Pages Posted: 28 Nov 2012
Date Written: December 2012
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: 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
By Henry Ergas
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