Marginal Cost Estimations in Airports. Multiproductive Cost Functions and Stochastic Frontiers: An International Airports Case Study

egarding some regulation fields, such as optimal investments and pricing policies, marginal cost estimations for infrastructure intensive transport services is always a challenging effort in providing some basis for important areas of economic regulation. The lack of comparable data among airports is one of the causes which could explain the relative scarcity of this literature in the previous studies. This paper estimates different specifications and methods, using mono and multi product translog specifications and a technical efficiency stochastic frontier. The authors also estimate long and short run cost functions, using a pooled database of financial data on 41 airports across Europe, North America, Asia and Australia for the period 1991-2005. The authors find significant economies of scale using Work Load Units (WLU) and Air Traffic Movements (ATM) as output measures. Additionally, we provide individual long and short run marginal costs estimates for each output measure, and for every airport under study. The variability of marginal cost estimations leads to further deviate from the assumption of neoclassical theory, and to study the existence of some important levels of inefficiency regarding airports performance. For this reason, the authors consider the stochastic frontier analysis which partially solves this matter.

• Corporate Authors:

  Transportation Research Forum

  P.O. Box 5074
  Fargo, ND  United States  58105
• Authors:
  • Martin, Juan Carlos
  • Voltes-Dorta, Augusto
• Conference:
  • Transportation Research Forum, 48th Annual Forum: 2007
  • Location: Boston University, Boston Massachusettes, United States
  • Date: 2007-3-15 to 2007-3-17
• Publication Date: 2007

Language

• English

Media Info

• Media Type: Print
• Features: Figures; References; Tables;
• Pagination: 19p
• Monograph Title: Transportation Research Forum, 48th Annual Forum

Subject/Index Terms

• TRT Terms: Air transportation; Air transportation facilities; Airports; Case studies; Cost estimating; International airports; Marginal costs; Policy, legislation and regulation; Stochastic processes
• Uncontrolled Terms: Cost functions
• Subject Areas: Aviation; Data and Information Technology; Finance; Terminals and Facilities;

Filing Info

• Accession Number: 01079461
• Record Type: Publication
• Files: TRIS
• Created Date: Oct 22 2007 10:14AM