Am. Zhang et Ym. Zhang, CONCESSION REVENUE AND OPTIMAL AIRPORT PRICING, TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW, 33(4), 1997, pp. 287-296
In recent years airports have been under growing pressure to become fi
nancially self-sufficient and to pursue profit maximization in their n
on-aeronautical or concession operations. In this paper we examine the
optimal pricing in a model where concession and aeronautical operatio
ns of an airport are considered together with an overall break-even co
nstraint. We find that the optimum solution may require a subsidy from
concession to aeronautical operations. However, such a cross-subsidy
may or may not restore marginal-cost pricing on aeronautical operation
s. On the other hand, social welfare can be higher when an airport is
allowed to make profits in concession operations than when marginal-co
st pricing is imposed on concession operations. (C) 1997 Elsevier Scie
nce Ltd. All rights reserved.