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Evaluating different pricing policies on social welfare: an application to Madrid Barajas
Martin, Juan Carlos
Betancor, Ofelia
2006
Abstract
In this paper, we assess the potential impacts of different airport charges schemes that can be applied in
Madrid Barajas airport. We use a model that has already been applied in the literature to calculate the
social welfare of the different price regimes. The term social welfare refers to the social welfare generated
from only aeronautical services, while the social welfare created from non-aeronautical activities will not
be discussed here. We define, as is common in the literature, that the social welfare is the sum of
consumer surplus and producer surplus. We analyze the potential impact of different pricing policies
using the values obtained on social welfare, and using the concept of ‘potential loss of social welfare’
when the lack of adequate capacity preclude the potential demand from using the airport. Thus, we
evaluate the “losses” or “gains” of each alternative pricing policy. Our results may contribute to the ongoing
debate in Madrid and around Europe about the merits of adjusting airport charges to different
scenarios, e.g. congestion or lack of capacity or excess of capacity, in which airports are usually involved.
Series
European Transport / Trasporti Europei
XI (2006) 32
Publisher
EUT Edizioni Università di Trieste
ISTIEE Istituto per lo studio dei trasporti nell’integrazione economica europea
Source
Juan Carlos Martin, Ofelia Betancor, "Evaluating different pricing policies on social welfare: an application to Madrid Barajas", in: European Transport / Trasporti Europei, XI (2006) 32, pp. 114-135.
Languages
en
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