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Airport Enterprises: An Economic Analysis

The Institute is delighted to announce our first foray into book publishing with ‘Airport Enterprises: An Economic Analysis’ written by David Starkie. ‘Airport Enterprises: An Economic Analysis’ frames the airport firm as a business platform for a broad spectrum of commercial activities, some of which enjoy the characteristics of two-sided markets. This is in contrast to the usual application of welfare economics as an analytical lens for airports, a lens which is argued to be inappropriate for an industry with an international customer base. Also challenged is the consensus that airports are natural monopolies; cost functions are not necessarily sub-additive, additional capacity is added mostly in small increments, and new entry feasible as a result of product diversification or negotiating parties striking long term pricing contracts. Finally, a number of questions are raised about current public policy, the standard interpretation of economic rents at congested airports, and existing plans for adding capacity at London Heathrow airport.

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