| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 1132455 | Transportation Research Part B: Methodological | 2012 | 8 Pages |
We study the effects of airport ownership (private vs. government) on welfare in the presence of airport complementarity, where each airport is located in a different country. Considering Cournot competition in the airline market, the unique Nash equilibrium is such that the two countries privatize their airports, even though both countries are better off, from a welfare perspective, with public (government-owned) airports. Considering a differentiated Bertrand competition in the airline market, the same result prevails if the cross price elasticities are sufficiently high, otherwise the symmetric government-ownership of airports may also be a Nash equilibrium.
► Public vs. private ownership of airports in the presence of airport complementarity. ► Both Cournot competition and differentiated Bertrand competition are considered. ► Privatizing an airport could be welfare improving. ► In most cases, privatization of the two airports is the unique Nash equilibrium. ► Both countries are better off in terms of welfare, with publicly owned airports.
