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Title: Subsidies in air transport markets: the economic consequences of choosing the wrong mechanism
Authors: Rus Mendoza, Ginés De 
Socorro Quevedo, María Del Pilar 
UNESCO Clasification: 531212 Transportes y comunicaciones
Keywords: Ad Valorem Subsidy
Market Power
Specific Subsidy
Issue Date: 2022
Journal: Transportation Research Part E: Logistics and Transportation Review 
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.
ISSN: 1366-5545
DOI: 10.1016/j.tre.2022.102659
Source: Transportation Research Part E: Logistics and Transportation Review[ISSN 1366-5545],v. 160, (Abril 2022)
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