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Title: Air transport subsidies for resident passengers when carriers have market power
Authors: Valido Quintana, Jorge 
Socorro, M. Pilar 
Hernández González, Aday 
Betancor Cruz, Ofelia María 
UNESCO Clasification: 531212 Transportes y comunicaciones
Keywords: Transportes aéreos
Issue Date: 2014
Publisher: 1366-5545
Journal: Transportation Research Part E: Logistics and Transportation Review 
Abstract: We consider passengers with different willingness to pay that may live in a given geographical area and, thus, be entitled to a subsidy. The carrier has market power and may increase the ticket price if a subsidy for resident passengers is introduced. First, we find that if the proportion of residents is high enough, non-resident passengers may be expelled from the market. Second, we show that specific (ad valorem) subsidies for resident passengers are better if the proportion of passengers with high willingness to pay is low (high) enough. Finally, we apply these results to the Canary Islands case.
ISSN: 1366-5545
DOI: 10.1016/j.tre.2014.08.001
Source: Transportation Research Part E: Logistics and Transportation Review[ISSN 1366-5545],v. 70, p. 388-399
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