ECONOMIES OF SCALE AND SCOPE OF AIRPORTS – A CRITICAL SURVEY

Main Article Content

Malte Lechmann
Hans-Martin Niemeier

Keywords

Economies of scale and scope, DEA, econometric estimations cost functions, natural monopoly

Abstract

The question whether airports are natural monopolies has increasingly become an issue in studies on regulation, deregulation and privatization of airports. In particular it was questioned whether airports have market power at all and if this is due to economies of scale and scope. This paper provides an overview of studies on economies of scale and scope. It critically evaluates the method of data gathering during the studies and the resulting information uncovers some drawbacks of the studies and the data gathering process. It reaches the conclusion that the most studies on economies of scale are problematic in regard to the definition of “output”, the treatment of capital and the exclusion of land side activities. Economies of scope have only been researched in the most recent studies. The study illustrates that the non-aviation business should be considered in more detail.

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