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Airport Privatization Competition Including Domestic Airline Networks

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Document pages: 26 pages

Abstract: This paper addresses the problem of hub airport privatization, similar to the studies by Matsumura and Matsushima (2012) and Mantin (2012). However, differentiating from their papers, this paper introduces a domestic airline network. That is, each country has one major hub airport and some local airports. The main result obtained in this paper is as follows. When at least one country has a small domestic airline network, the same result as that by Matsumura and Matsushima (2012) and Mantin (2012) is obtained. However, when both countries have a large domestic airline network, the public airport may be an equilibrium outcome. Furthermore, depending on the size of the airline network and the degree of airline competition, asymmetric equilibrium can also appear.

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