
The Mohring–Harwitz (1962) theorem states that the degree of self-financing of congested infrastructure is equal to the elasticity of the capacity cost function in the optimum, so that under neutral scale economies exact self-financing applies. The theorem breaks down when the infrastructure is used by operators with market power, the case in point often being airlines at a congested airport. This paper proposes a regulatory scheme that restores self-financing in such cases; partially so in general, and perfectly so under specific circumstances that include (1) the satisfaction of a particular proportionality condition, and (2) either the isolation of budgets needed for subsidies to counter demand-related mark-ups, or perfectly elastic demands so that such mark-ups are zero. Moreover, exact self-financing applies in this scheme independent of the elasticity of the capacity cost function, and occurs for both parametric and “manipulable” congestion pricing.
R41, Self-financing infrastructure, capacity choice, R48, Monopolistischer Wettbewerb, Congestion pricing, capacity choice, self-financing infrastructure, market power, airport congestion, Bottleneck, Capacity choice, Market power, Airport congestion, SDG 17 - Partnerships for the Goals, Luftverkehrsgesellschaft, self-financing infrastructure, Infrastrukturfinanzierung, Flughafenbau, ddc:330, market power, SDG 11 - Sustainable Cities and Communities, D62, airport congestion, Congestion pricing, Duopol, Theorie, jel: jel:D62, jel: jel:R41, jel: jel:R48
R41, Self-financing infrastructure, capacity choice, R48, Monopolistischer Wettbewerb, Congestion pricing, capacity choice, self-financing infrastructure, market power, airport congestion, Bottleneck, Capacity choice, Market power, Airport congestion, SDG 17 - Partnerships for the Goals, Luftverkehrsgesellschaft, self-financing infrastructure, Infrastrukturfinanzierung, Flughafenbau, ddc:330, market power, SDG 11 - Sustainable Cities and Communities, D62, airport congestion, Congestion pricing, Duopol, Theorie, jel: jel:D62, jel: jel:R41, jel: jel:R48
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