Dec 31, 1968
Discussion of the role of congestion tolls to increase the efficiency of use of commercial airports, in terms of a simple model of air transportation. In contrast to previous discussions, users and producers of transportation service (passengers and airlines) are explicitly distinguished. In the first version of the model, ticket prices are assumed--unrealistically--to be flexible and competitively determined; then perfect optimality is attainable by imposing an appropriate toll either on airlines or on passengers. In the more realistic second version of the model, ticket price is fixed above the competitive level. In the absence of toll, there are two inefficiencies: The level of transportation is non-optimal, and it is produced inefficiently, using partially loaded airplanes. An appropriate toll on airlines can do much to correct both of these inefficiencies, and is always superior to the best toll on passengers. (See also P-4134.) 23 pp.