Airport Privatization and International Competition
University of Tokyo - Institute of Social Science
Osaka University - Institute of Social and Economic Research
Japanese Economic Review, Vol. 63, Issue 4, pp. 431-450, 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.
Number of Pages in PDF File: 20
JEL Classification: L33, L13, R48
Date posted: November 28, 2012