In this study we consider a sample of the largest UK airports in order to estimate, for the first time for this sector, a multiproduct cost function using a flexible technology that nests most of the specifications commonly employed in the empirical literature. Another novelty of this work is that we provide estimates of quasi- scope economies for the airport industry, defined as the cost advantage for a diversified firm of jointly providing a set of outputs/services with respect to the costs of their provision through a set of firms quasi-specialized in a single production. Our main results suggest the existence of quasi-scope economies that tend to decline with the size of the airport. This finding, coupled with the results of a set of cost complementarity tests, suggest that cost savings mainly arise from the joint provision of services for national and international passengers and, to a lesser extent, to the addition of cargo transport activities. In turn, pairs of outputs that include (a proxy of) commercial revenues seem to be characterized by anti-cost complementarities. Finally, global economies of scale seem to be exhausted at about five million passengers.
Scale and (Quasi) Scope Economies in Airport Technology. An Application to UK Airports
Bottasso Anna;Conti Maurizio;
2019-01-01
Abstract
In this study we consider a sample of the largest UK airports in order to estimate, for the first time for this sector, a multiproduct cost function using a flexible technology that nests most of the specifications commonly employed in the empirical literature. Another novelty of this work is that we provide estimates of quasi- scope economies for the airport industry, defined as the cost advantage for a diversified firm of jointly providing a set of outputs/services with respect to the costs of their provision through a set of firms quasi-specialized in a single production. Our main results suggest the existence of quasi-scope economies that tend to decline with the size of the airport. This finding, coupled with the results of a set of cost complementarity tests, suggest that cost savings mainly arise from the joint provision of services for national and international passengers and, to a lesser extent, to the addition of cargo transport activities. In turn, pairs of outputs that include (a proxy of) commercial revenues seem to be characterized by anti-cost complementarities. Finally, global economies of scale seem to be exhausted at about five million passengers.File | Dimensione | Formato | |
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