WHU – Working Paper Series in Economics
ISSN 2511-1159
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- 2012 (2) (show_all)
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WP 12/01
This paper analyzes a congested airport that provides aeronautical services to airlines and concessions to retailers and car rental companies. The sum of retail demands inside and outside the airport area is fixed, while an increase of the passenger quantity increases car rental demand. It is shown that an increase of the per passenger retail profit can reduce the private aeronautical charge and the private car rental charge. By contrast, the effect of car rentals on the private aeronautical charge is ambiguous. The welfare-optimal passenger number and aeronautical charge are both independent of retail profit.
WP 12/02
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.