Another Look at Airport Congestion Pricing

Abstract

We study alternate approaches to implement congestion pricing at US airports. Conventional formulations toll all aircraft without determining whether a plane operated by a given airline delays other planes that it operates or planes operated by other airlines. Recent work points out optimal pricing calls for carriers to be charged only for the delay they impose on other airlines. We find a small difference between the net benefits generated by the two congestion-pricing policies because the bulk of airport delays are not internalized and because the efficiency loss from pricing internalized congestion is small. (JEL L11, L93, R41)

Optimal Pricing of Flights and Passengers at Congested Airports: The Efficiency of Atomistic Charges

“…total marginal congestion costs times the market share of each airline (in our model the closed-loop toll in equation 30). Morrison and Winston (2007) find a small difference between the net benefits of charging the Cournot toll versus the atomistic toll that ignores any internalization. Then, Brueckner and Van Dender (2008) shows that Stackelberg behavior with a Cournot follower yields optimal airport tolls that lie in between of both policies.…”

Atomistic congestion tolls at concentrated airports? Seeking a unified view in the internalization debate

“…The answer is unclear. Empirical evidence on internalization exists, of course, In the face of these ambiguities, a possible stance in the internalization debate is suggested by the results of a recent paper by Morrison and Winston (2006). These authors show that, even if internalization is assumed to occur, the welfare loss from levying inappropriate atomistic congestion tolls is relatively small.…”

On the Performance of the U.S. Transportation System: Caution Ahead

“…Such charges at congested airports would raise equity concerns because carriers with smaller market shares would pay higher charges than carriers with larger market shares would pay. However, those issues appear to be moot because Morrison and Winston (2007) found only small welfare improvements from setting optimal charges along the lines suggested by Brueckner and Mayer and Sinai instead of charging carriers for delaying any flight.…”