Airport Complementarity: Private vs. Government Ownership and Welfare Gravitation
MIT Center for Transportation & Logistics Research Paper No. 2012/024
Transportation Research Part B: Methodological, volume 46, issue 3, 2012[10.1016/j.trb.2011.10.001]
Posted: 29 Apr 2025
Date Written: January 01, 2012
Abstract
We study the effects of airport ownership (private vs. government) on welfare in the presence of airport complementarity, where each airport is located in a different country. Considering Cournot competition in the airline market, the unique Nash equilibrium is such that the two countries privatize their airports, even though both countries are better off, from a welfare perspective, with public (government-owned) airports. Considering a differentiated Bertrand competition in the airline market, the same result prevails if the cross price elasticities are sufficiently high, otherwise the symmetric government-ownership of airports may also be a Nash equilibrium. © 2011 Elsevier Ltd.
Keywords: Airports, AirportsComplementarity, AirportsComplementarityPrivate ownership, AirportsComplementarityPrivate ownershipPublic ownership
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