Game-theoretical model explores airport slot allocation and airline competition, indicating welfare outcomes vary based on regulatory intervention.
A game-theoretical model is developed in the context of the regulated multi-airport system (MAS), examining the regulator's policy in airport slot allocation and airlines' airport entry decisions. The regulator has a mixing objective to put different weights on passenger surplus and airports/airlines' profits. It can choose to intervene in airline allocation (that is, one-airport-one-airline rule) or not. It is found when the regulator does not intervene in airline allocation, airlines choose to enter both airports bringing about higher welfare. However, the regulator would intervene if it puts a sufficiently high weight on airports/airlines' profits.
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Hou et al. (2022) studied this question.
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