Optimal regulation design of airports: Investment incentives and impact of commercial services

David Martimort (1, 2) , Guillaume Pommey (3) , Jerome Pouyet (4, 5)

1 PSE - Paris School of Economics
2 EHESS - École des hautes études en sciences sociales
3 Università degli Studi di Roma Tor Vergata [Roma] = University of Rome Tor Vergata
4 THEMA - Théorie économique, modélisation et applications
5 ESSEC Business School

Modern airports provide commercial services to passengers in addition to aeronautical services to airlines. We analyze how the airport's market power impacts the pricing of services when the airport also invests in the quality of its infrastructure. There is a need to regulate the airport and the optimal regulation can be implemented with a price-cap and a subsidy scheme targeted to the investment. The choice between a single-till and a dual-till approach does change neither the optimal regulation nor its implementation. We also investigate the consequences on the optimal regulation of the nature of the airport-airline relationship and of the observability of investment.

Mots clés: airports; regulation; commercial services; investment; airports

Domaines: Sciences de l'Homme et Société; Économie et finance quantitative [q-fin]

David Martimort, Guillaume Pommey, Jerome Pouyet. Optimal regulation design of airports: Investment incentives and impact of commercial services. Transportation Research Part B: Methodological, 2022, ⟨10.1016/j.trb.2022.07.008⟩. ⟨hal-03328394v2⟩