Infrastructure, Competition Regimes, and Air Transport Costs: Cross-Country Evidence
The relevance of transport costs has increased as liberalization continues to reduce artificial barriers to trade. Countries need to adopt policies to get closer to global markets. Can improvements in infrastructure and regulation reduce transport...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/07/4984006/infrastructure-competition-regimes-air-transport-costs-cross-country-evidence http://hdl.handle.net/10986/14179 |
| Summary: | The relevance of transport costs has
increased as liberalization continues to reduce artificial
barriers to trade. Countries need to adopt policies to get
closer to global markets. Can improvements in infrastructure
and regulation reduce transport costs? Is it worthwhile to
implement policies designed to increase competition in
transport markets? Focusing on air transport, which has
increased its share in US imports from 24 percent in 1990 to
35 percent in 2000, this paper quantifies the effects of
infrastructure, regulatory quality and liberalization of air
cargo markets on transport costs. During the 1990s, the
United States implemented a series of Open Skies Agreements,
providing a unique opportunity to assess the effect that a
change in the competition regime has on prices. We find that
infrastructure, quality of regulation and competition
matter. In our sample, an improvement in airport
infrastructure from the 25th to 75th percentiles reduces air
transport costs by 15 percent. A similar improvement in the
quality of regulation reduces air transport costs by 14
percent. Open Skies Agreements further reduce air transport
costs by 8 percent. |
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