A welfare analysis of subsidies for airports |
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| Institution: | 1. Department of Economics, University of Florida, Gainesville, FL, 32611, USA;2. College of Innovation and Technology, Florida Polytechnic University, Lakeland, FL, 33805, USA;3. Department of Chemistry, Columbia University, New York, NY, 10027, USA;1. College of Computer, Nanjing University of Posts and Telecommunications, Nanjing, Jiangsu, China;2. Jiangsu High Technology Research Key Laboratory for Wireless Sensor Networks, Nanjing, Jiangsu, China;3. School of Biomedical Engineering, Sun Yat-Sen University, Guangzhou, Guangdong, China;4. Graduate Program in Applied Informatics, University of Fortaleza, Brazil;1. Department of Economics, IESE Business School, Camino del Cerro del Águila 3, 28023 Madrid, Spain;2. Department of Economics, Universidad Carlos III de Madrid, Calle Madrid 126, 28903 Getafe (Madrid), Spain;1. School of Aerospace Engineering, Aerospace Systems Design Laboratory, Georgia Institute of Technology, 275 Ferst Dr., Atlanta, GA 30332-0150, USA;2. Civil Aviation Research Division, School of Aerospace Engineering, Aerospace Systems Design Laboratory, Georgia Institute of Technology, 275 Ferst Dr., Atlanta, GA 30332-0150, USA;3. Boeing Regents Professor of Advanced Aerospace Systems Analysis, School of Aerospace Engineering, Aerospace Systems Design Laboratory, Georgia Institute of Technology, 275 Ferst Dr., Atlanta, GA 30332-0150, USA;1. Center for Economic Studies, Katholieke Universiteit Leuven, Naamsestraat 69, 3000 Leuven, Belgium;2. European center for advanced research in economics and statistics, Université Libre de Bruxelles, 42 Avenue Roosevelt, 1050 Brussel, Belgium;3. Departamento de Matemáticas, Facultade de Economía, Universidade de Vigo, Campus Lagaos-Marcosende, 36310 Vigo, Spain |
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| Abstract: | The welfare of residents and profitability of business in many medium-sized MSAs would be improved if their airports had a higher level of service, for example reflected by more frequent flights serving more destinations. The level of service at such airports may rise with the number of enplanements, making total enplanements and the level of service subject to a positive feedback effect. Using a new annual data set put together by combining five sources for the years 2002 through 2012, we find evidence for such a positive feedback effect. We argue that subsidies at smaller airports may be welfare-enhancing in the presence of such an effect. |
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| Keywords: | Agglomeration Airports Aviation economics Subsidy |
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