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Environmental Costs and Liberalization in European Air Transport

A Welfare Economic Analysis Youdi Schipper, Vrije Universiteit, Amsterdam, The Netherlands
With air transport becoming an increasingly vital part of the economy, the regulatory reform of this market has been a major development in European political economy. This book focuses on two market failures within the airline industry – market power and environmental externalities – and analyses how they have been affected by deregulation. The author employs economic models complemented by extensive empirical research, to demonstrate how the introduction of competition, brought about by liberalization, has resulted in considerable consumer benefits.
Extent: 224 pp
Hardback Price: $127.00 Web: $114.30
Publication Date: 2001
ISBN: 978 1 84064 605 4
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  • Economics and Finance
  • Transport
  • Environment
  • Transport
  • Urban and Regional Studies
  • Transport
With air transport becoming an increasingly vital part of the economy, the regulatory reform of this market has been a major development in European political economy. This book focuses on two market failures within the airline industry – market power and environmental externalities – and analyses how they have been affected by deregulation. The author employs economic models complemented by extensive empirical research, to demonstrate how the introduction of competition, brought about by liberalization, has resulted in considerable consumer benefits.

The author argues that these benefits, such as increased choice through the expansion of operations, must be off set against increased environmental costs including greater noise pollution and emissions, not to mention the reduction of profits that often accompany market liberalization. In the process the book tackles a number of important issues including the background and history of airline regulation in the EU, the basic policy trade-off between monopoly power and external costs, monetary valuation of externalities, and the relationship between airline scheduling and external costs. Perhaps surprisingly, the author concludes that even in the presence of environmental costs, the introduction of competition in airline markets has resulted in net welfare improvements.

Policymakers, as well as practitioners and researchers of environmental and transport economics, should draw great value from this original and pertinent volume.
‘. . . the author makes an interesting contribution to the international aviation literature. This book should be on the reading list of anybody with a serious interest in (the environmental impact of) aviation.’
– Eric Pels, Journal of Air Transport Management

‘The author makes a timely contribution to the literature by examining the impacts of regulatory reform on airline market structure and competition, as well as on the environmental costs of air travel. This book is an informative and scholarly piece that provides a forthright assessment of the gains and losses to be expected from airline market reform.’
– Robin Lindsey, University of Alberta, Canada
Contents: Preface 1. Introduction 2. Regulation and Reform in Aviation Part I: Environmental Costs in Air Transport Markets 3. Evaluating Environmental Externalities 4. Noise 5. Emissions 6. Environmental Costs in European Aviation Part II: Economic Analysis of Air Transport Liberalization 7. Frequency Choice in Air Transport Markets 8. Frequency Choice and Liberalization: Simulation Modeling 9. Airline Liberalization in Networks 10. Welfare Effects of European Airline Liberalization 11. Conclusion Appendices Bibliography Index