Market structure, countervailing power and price discrimination: The case of airports

Haskel, Jonathan; Iozzi, Alberto; Valletti, Tommaso

Abstract

A number of interesting policy questions have arisen regarding airport landing fees. For example, what is the impact of joint ownership of airports? Does airline countervailing power stop airports raising fees? Should airports be prohibited, as an EU directive intends, from charging differential input prices to airlines? We set out a model of upstream airports and downstream airlines with varying countervailing power and pricing structures. Our major findings are: (a) an increase in upstream concentration or in the degree of differentiation between airports always increases the landing fee; (b) the effect of countervailing power, via an increase in downstream concentration, lowers landing fees, but typically does not pass through to consumers; (c) with Cournot competition, uniform landing fees are always higher than discriminatory fees.

Citation

Haskel, J., Iozzi, A., & Valletti, T. (2013). Market structure, countervailing power and price discrimination: The case of airports. Journal of Urban Economics, 74, 12-26. https://doi.org/10.1016/j.jue.2012.09.002

• Journal Article Type: Article
• Publication Date: Jan 1, 2013
• Deposit Date: Oct 15, 2013
• Publicly Available Date: Jan 2, 2113
• Journal: Journal of Urban Economics
• Print ISSN: 0094-1190
• Electronic ISSN: 1095-9068
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 74
• Pages: 12-26
• DOI: https://doi.org/10.1016/j.jue.2012.09.002