Price-cap Regulation of Airports: Single-till Versus Dual-till

Abstact This paper takes up the debate whether price-cap regulation of airports should take the form of single-till or dual-till regulation. The contribution is to model single- and dual-till regulation, evaluate their welfare implications, and compare them to Ramsey charges. We show that single-till regulation dominates dual-till regulation at non-congested airports with regard to welfare maximization. However, none of them provides an airport with incentives to implement Ramsey charges. A Ramsey optimal price-cap regulation, which achieves this goal, is also presented. Thanks to Kay Mitusch, Pio Baake, and Sascha Lukac for very helpful comments.