Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/61904
Title: Can market power be controlled by regulation of core prices alone? An empirical analysis of airport demand and car rental price
Authors: Czerny, AI 
Shi, Z
Zhang, A
Keywords: Airport
Car rentals
Core goods
Monopoly
Side goods
Issue Date: 2016
Publisher: Pergamon Press
Source: Transportation research. Part A. Policy and practice, 2016, v. 91, p. 260-272 How to cite?
Journal: Transportation research. Part A. Policy and practice 
Abstract: Many firms offer “core” and “side” goods in the sense that side-good consumption is conditional on core-good consumption. Airports are a common example where the supply of runway and terminal capacity is the core good and the supply of various concession services (for example, car rental services) is the side good. While side-good supply can be responsible for a major share in total revenue, monopoly regulation typically concentrates on the control of core-good prices (“core prices” in short). Whether market power can indeed be effectively controlled by the regulation of core prices alone then depends on whether core-good consumption is a function of the price for side goods. This study empirically shows that a one-dollar increase in the daily car rental price reduces passenger demand at 199 US airports by more than 0.36%. A major implication of our findings is that for the case of airports, the effective control of market power may require regulation of both prices for core and side goods.
URI: http://hdl.handle.net/10397/61904
ISSN: 0965-8564
DOI: 10.1016/j.tra.2016.06.022
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