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Airport pricing policies: airline conduct, price discrimination, dynamic congestion and network effects
Silva Montalva, H.E.
2015
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citation for published version (APA)
Silva Montalva, H. E. (2015). Airport pricing policies: airline conduct, price discrimination, dynamic congestion
and network effects. Tinbergen Institute.
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Contents
Preface i
Contents v
1 Introduction 1
1.1 Air transport . . . 2
1.2 The economics of airport pricing . . . 3
1.3 The industrial organization of transport markets . . . 6
1.4 Outline of the thesis and preview of results . . . 7
2 Airlines’ strategic interactions and airport pricing in a dynamic bottleneck model of congestion 11 2.1 Introduction . . . 12
2.2 The model . . . 15
2.3 A Stackelberg leader with a competitive fringe . . . 25
2.4 Conclusions . . . 36
Appendix 2.A Glossary of notation . . . 38
Appendix 2.B Derivation of the equilibrium in the perfect competitive case . . 38
Appendix 2.C Fringe’s response and leader’s first-order conditions . . . 40
3 On the existence and uniqueness of equilibrium in the bottleneck model with atomic users 43 3.1 Introduction . . . 44
3.2 The bottleneck model with homogeneous non-atomic users . . . 46
3.3 Existence and non-existence of equilibrium with homogeneous atomic users 48 3.4 Nonuniqueness of equilibrium with heterogeneous atomic users . . . 60
3.5 Conclusions . . . 67
Appendix 3.A Glossary of notation . . . 69
Appendix 3.B Proof of Lemma 3.2 . . . 69
Appendix 3.C Proof of Lemma 3.4 . . . 70
Appendix 3.D Proposition 3.2: Proof of Result 4 for mass departures . . . 72
Appendix 3.E Asymmetric equilibrium costs with γ ≤ α . . . 76
Appendix 3.F Heterogeneous desired arrival times . . . 76
4 Optimal pricing of flights and passengers at congested airports and the efficiency of atomistic charges 81 4.1 Introduction . . . 82
4.2 Airlines’ duopoly model . . . 85
CONTENTS
4.3 Airport pricing and capacity investment . . . 93
4.4 Numerical analysis . . . 98
4.5 Conclusions . . . 105
Appendix 4.A Glossary of notation . . . 107
Appendix 4.B Reaction functions . . . 107
Appendix 4.C Welfare maximizing airport first-order conditions . . . 109
5 Input third-degree price discrimination by congestible facilities 111 5.1 Introduction . . . 112
5.2 The model and the downstream markets . . . 115
5.3 Private facility . . . 117
5.4 Public facility . . . 125
5.5 Comparison of the welfare effect under private and public ownership . . . . 129
5.6 Robustness: downstream first-degree price discrimination . . . 132
5.7 Conclusions . . . 134
Appendix 5.A Glossary of notation . . . 137
Appendix 5.B Calculations and proofs for Section 5.3 . . . 137
Appendix 5.C Calculations and proofs for Section 5.4 . . . 144
Appendix 5.D Calculations and proofs for Section 5.5 . . . 148
6 Airline route structure competition and network policy 155 6.1 Introduction . . . 156
6.2 The model . . . 159
6.3 Airlines equilibrium . . . 161
6.4 Welfare analysis . . . 170
6.5 Sufficient instruments for social welfare maximization . . . 176
6.6 Conclusions . . . 183
Appendix 6.A Glossary of notation . . . 185
Appendix 6.B Functional forms and parameters of the main case . . . 185
Appendix 6.C Sensitivity analysis . . . 186
7 Conclusions 193 7.1 Summary of results and implications . . . 194
7.2 Suggestions for future work . . . 197
Bibliography 201
Samenvatting (summary in Dutch) 211
