 Subsidies in air transport markets: The economic consequences of choosing the wrong mechanismGinés de Rus and M. Pilar Socorro Transportation Research Part E: Logistics and Transportation Review, 2022, vol. 160, issue C Abstract: In this paper, we analyze the efficiency of ad valorem and specific subsidies for resident passengers in air transport markets. A fixed discount per trip and route is always superior to the ad valorem alternative. We prove that the effectiveness of the subsidy for resident passengers strongly depends on the particular characteristics of the route, such as the level of competition, the proportion of residents, or the shape of residents’ and non-residents’ demand functions. Thus, any evaluation of the effects of such subsidies has to be performed route by route, taking into account the particular characteristics of the route, market share of residents and non-residents, degree of competition, and the period of time when the operations take place. Keywords: Ad valorem subsidy; Specific subsidy; Residents; Market power; Airlines (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:160:y:2022:i:c:s1366554522000552 Ordering information: This journal article can be ordered from DOI: 10.1016/j.tre.2022.102659 Access Statistics for this article Transportation Research Part E: Logistics and Transportation Review is currently edited by W. Talley More articles in Transportation Research Part E: Logistics and Transportation Review from Elsevier |
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