Airport's Profit Sharing: Effects on Investment Incentives, Competition and Social Welfare

• Type: Article in International Scientific Journal
• Date: 2013

Authors

Paula Sarmento (Author) FEP; António Brandão (Author) FEP

Journal

Title: European Journal of Transport and Infrastructure Research

Vol. 13 No. 4

Pages: 291-314

ISSN: 1567-7133

Publisher: EDITORIAL BOARD EJTIR

Indexing

ISI Web of Knowledge - 3 Citations

Scopus - 4 Citations

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-008-GG1

Abstract (EN): The aim of this paper is to investigate the effects of airport's profit sharing on the incentives to invest, market competition and social welfare. The analysis is developed under two frameworks, one with a single airport and one with two competing airports, and both with airline competition. We conclude that airport's profit sharing may display the highest incentive to invest when compared to alternative vertical relations. Also, we found that airport's profit sharing excludes the independent airline, as long as the profit airport participation is not below 60%. Moreover, airport's profit sharing does not allow the elimination of double marginalization and thus the effects on social welfare are ambiguous.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 24