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Cost-Based Versus Incentive Regulation for Airports

In: Economic Regulation of Urban and Regional Airports

Author

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  • Eric Pels

    (VU University, School of Business and Economics)

Abstract

This chapter contributes to the discussion on the most suitable form of airport regulation by focusing on the impact of airline behavior and the international focus of airports on the choice of regulatory scheme. Different objectives are discussed (welfare maximization, rent control, or efficient production), and the chapter touches upon the question of high- or low-powered regulation as the most suitable method to achieve said objectives. Low-powered airport regulation potentially leaves the rents to airlines, and not necessarily the final consumers. High-powered regulation leaves the rents with the local airport rather than with the international airlines, which may be politically convenient. If airlines are active in competitive markets, low-powered regulation leaves rents to passengers, and if the majority of these passengers is foreign, this scheme may also not be politically feasible.

Suggested Citation

  • Eric Pels, 2023. "Cost-Based Versus Incentive Regulation for Airports," Advances in Spatial Science, in: Peter Forsyth & Jürgen Müller & Hans-Martin Niemeier & Eric Pels (ed.), Economic Regulation of Urban and Regional Airports, chapter 0, pages 111-123, Springer.
    • Handle: RePEc:spr:adspcp:978-3-031-20341-1_5
    DOI: 10.1007/978-3-031-20341-1_5
    as

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