Air Traffic Control Regulation with Union Bargaining
25 Pages Posted: 4 Sep 2015
Date Written: August 2015
This paper studies the behavior of the air traffic control (ATC) centers in the EU. We investigate the functioning of the European ATC sector with a union bargaining model. In this model, working conditions are the outcome of a bargaining game between the public air traffic control agency and the unions of air traffic controllers. We use this framework to understand the behavior of the ATC centers for wage formation, their reactions to a price-cap, adoption of new technologies, congestion pricing, effect of vertical disintegration, competition and the possible success of mergers between different national ATC centers. The theory is able to explain the slow progress in ATC performance in a unionized environment. We also test the theoretical model and estimate its parameters. The empirical analysis is based on actual ATC performance data.
Keywords: Air transport control, public utilities, price control, union bargaining
JEL Classification: L93, R48, J51, L51, L44, L33
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