This paper suggests how marginal cost pricing can be used to optimize the level of service provided by air transport. The analysis indicates (1) that active governmental intervention is generally necessary to achieve a social optimum: (2) that fixed prices, as implied either by regulation of IATA, are largely ineffective by themselves at maximizing either the public good or private gain to the airlines; (3) that the governmental intervention should involve either taxes or subsidies, depending on the kind of externalities that exist, and that these should be applied differentially to the passengers and airlines; and (4) that it is optimal, for both the public and the airlines, to fly aircraft essentially full and that it would be desirable to institute a system of flexible prices for off-peak travel so that this could be achieved. /Author/

  • Corporate Authors:

    Pergamon Press, Incorporated

    Maxwell House, Fairview Park
    Elmsford, NY  United States  10523
  • Authors:
    • De Neufville, R L
    • Mira, L J
  • Publication Date: 1974-8

Media Info

  • Features: Figures; References;
  • Pagination: p. 181-192
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00155693
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jun 28 1978 12:00AM