Airport congestion pricing when airlines price discriminate

  • This paper develops a tractable model of third-degree price discrimination in airline markets that features two types of passengers with different time valuations, carriers in Cournot competition and a congested infrastructure. We find that price discrimination always leads to a loss of social welfare when, in the first stage, the congestion charge is chosen to maximize welfare by incorporating carriers’ behavior in the second stage. We also show that the welfare loss can be small if, in the process of choosing the optimal airport charges, carriers were treated as atomistic.

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Metadaten
Author:Achim I. Czerny, Anming Zhang
URN:urn:nbn:de:hbz:992-opus4-4078
Series (Serial Number):WHU – Working Paper Series in Economics (WP 12/02)
Publisher:WHU - Otto Beisheim School of Management
Place of publication:Vallendar
Document Type:Working Paper
Language:English
Date of Publication (online):2017/06/09
Publishing Institution:WHU - Otto Beisheim School of Management
Release Date:2017/06/09
Tag:Cournot-Oligopol; Infrastruktur; Luftverkehrsgesellschaft; Preisdiskriminierung; Stauung
Airline; Congestion; Cournot competition; Infrastructure; Price discrimination
Volume:2012
Issue:WP 12/02
Page Number:27
Institutes:WHU Economics Group / Lehrstuhl für Controlling und Regulierungsökonomik
JEL-Classification:D Microeconomics / D4 Market Structure and Pricing / D43 Oligopoly and Other Forms of Market Imperfection
D Microeconomics / D6 Welfare Economics / D62 Externalities
H Public Economics / H2 Taxation, Subsidies, and Revenue / H23 Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L Industrial Organization / L1 Market Structure, Firm Strategy, and Market Performance / L13 Oligopoly and Other Imperfect Markets
L Industrial Organization / L9 Industry Studies: Transportation and Utilities / L93 Air Transportation
R Urban, Rural, and Regional Economics / R4 Transportation Systems / R41 Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise
R Urban, Rural, and Regional Economics / R4 Transportation Systems / R48 Government Pricing; Regulatory Policies; Transportation Planning
Licence (German):Copyright for this publication