A simple analysis of the rent seeking of airlines,airports and politicians |
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| Affiliation: | 1. Nationwide Children''s Hospital and The Ohio State University Wexner Medical Center, Columbus, Ohio;2. Division of Pulmonary Medicine, Allergy, and Immunology, Children''s Hospital of Pittsburgh of the University of Pittsburgh School of Medicine and the University of Pittsburgh School of Medicine, Pittsburgh, Pennsylvania;3. Division of Pulmonary, Allergy, Critical Care and Sleep Medicine, The Ohio State University Wexner Medical Center, Columbus, Ohio;1. CERIS, Instituto Superior Técnico, Universidade de Lisboa, Portugal;2. Advance/CSG ISEG-Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Miguel Lupi No. 20, 1200-078 Lisboa, Portugal;1. Institute for Marine and Antarctic Studies, University of Tasmania, Private Bag 49, Hobart, Tasmania 7001, Australia;2. School of Economics and Finance, University of Tasmania, Private Bag 85, Hobart, Tasmania 7001, Australia;1. Department of City and Regional Planning, University of Pennsylvania, 127 Meyerson Hall, 210 S. 34th Street, Philadelphia, PA 19104, United States;2. Department of Electrical and Systems Engineering, University of Pennsylvania, 200 South 33rd Street, 203 Moore Building, Philadelphia, PA 19104, United States |
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| Abstract: | Economic rent seeking is the raison d'être of a commercial undertaking and acts as the manipulator of Adam Smith's ‘invisible hand’. The retention of economic rent, however, can cause undesirable distortions, especially if it persists over a long period. Public policy, therefore, often seeks to tempt business with the promise of rent, allow business an occasional nibble, but at the same time create structures whereby business cannot swim away with the bait. The discussion here is of how slot allocation procedures have rent seeking implications that affect both the existence of economic rents and the distribution of these rents. The actors in the game are the airlines, airports and politicians (broadly defined to include the executive as well as legislators). The ultimate distribution of rent is essentially a political decision, as is any form of allocation, but its form is influenced by the underlying nature of the market for slots and the way in which market power is spread. |
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