Optimising investment in regulated airports

Achim Ingo Czerny, Peter Forsyth

Research output: Chapter in book / Conference proceedingConference article published in proceeding or bookAcademic researchpeer-review

Abstract

Regulation is known to change the incentives a firm faces to invest, inducing some firms to invest too much, and others too little. Regulators must set prices to achieve several conflicting objectives, including providing the incentive to invest. Optimising investment is a particular problem in regulated airports, and many of the inefficiency problems noted with airports can be ascribed to inadequate or excessive investment. Airport regulation is also expected to address issues of congestion, quality of service and productive efficiency, while, in many cases, at the same time achieving distributional objectives. This paper explores the properties of alternative forms of regulation, including price caps and cost plus, in achieving the optimal level of investment, along with meeting other objectives. Cost based regulation can have advantages over price caps in some contexts. The optimisation task is helped considerably by the existence of secondary instruments, including slot controls and conditional price caps.
Original languageEnglish
Title of host publicationProceedings of International Forum on Shipping, Ports and Airports, IFSPA 2008 - Trade-Based Global Supply Chain and Transport Logistics Hubs
Subtitle of host publicationTrends and Future Development
Pages60-70
Number of pages11
Publication statusPublished - 1 Dec 2008
Externally publishedYes
EventInternational Forum on Shipping, Ports and Airports, IFSPA 2008 - Trade-Based Global Supply Chain and Transport Logistics Hubs: Trends and Future Development - Hong Kong, Hong Kong
Duration: 25 May 200828 May 2008

Conference

ConferenceInternational Forum on Shipping, Ports and Airports, IFSPA 2008 - Trade-Based Global Supply Chain and Transport Logistics Hubs: Trends and Future Development
CountryHong Kong
CityHong Kong
Period25/05/0828/05/08

Keywords

  • Airport slots
  • Congestion
  • Cost based regulation
  • Efficient pricing
  • Price caps

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Electrical and Electronic Engineering
  • Mechanical Engineering
  • Transportation

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