This paper showed the existence of economies of traffic density in Japanese domestic aviation market. In analysis, we carried out simultaneous estimation of the supply-and-demand function using the prefectures' level's OD flow data. About supply-side economies of traffic density pointed out / taken into consideration by many existing researches, the existence was statistically significant as a result of estimation. Thus, when analyzing the structure of aviation market, the importance of taking economies of traffic density into consideration is pointed out. The coefficient of airport dummy variables, such as Haneda, Itami/Kansai, Shin-chitose Airport that are taken into consideration with a marginal cost function, has many positive cases. Thus, a possibility that a large-scale airport is the result of reflecting the height of a landing fee and congestion relatively compared with a local airport is pointed out.
View full abstract