Behavioral and Experimental Economics

Summer School Experimental Economics

The Behavioral and Experimental Economics group has an influential position in this field in the Netherlands and Europe. CREED, the Amsterdam-based group, focuses particularly on three main projects: economics of political decision making; bounded rationality and institutions and experimental economics. The research of the Rotterdam-based group focuses on two broad themes: decision under risk and uncertainty and intertemporal choice.

Cooperative Behavior, Strategic Interaction and Complex Systems

This research group focuses on: (non-)cooperative game theory; nonlinear dynamics and complex systems; bounded rationality, learning and heterogenous expectations; dynamic models of collective behavior and social networks & dynamic optimization.

Econometrics and Operations Research

Research themes: time series econometrics, panel data, Bayesian econometrics, applied econometrics and econometric methodology. Applications can be found in areas as diverse as monetary economics, labor economics, marketing and asset pricing. Some fellows in this group focus on operations research.

Finance

The Finance group at TI spans many of the core fields in finance: asset pricing, corporate finance, financial econometrics, market microstructure, and financial institutions.

Labor, Health, Education and Development

At TI, a large group of fellows works in different areas of labour, health, education and development.

Macroeconomics and International Economics

Fellows in the Macroeconomics and International Economics group carry out research on growth, innovation, international trade and factor mobility, the role of economic geography, banking and monetary economics, and fiscal policy.

Organizations and Markets

The Organizations and Markets (OM) group spans many areas in (applied) microeconomics, including the economics of organizations, industrial organization, entrepreneurship, innovation, and auctions.

Spatial, Transport and Environmental Economics

The STEE group addresses four themes: urban and regional dynamics, land use, transportation, and environment and resources. Many fellows combine policy research with fundamental research.

Author(s)
Email
e.t.verhoef@vu.nl
Journal
Journal of Public Economics, 2013, 106, 1-13

This paper investigates and compares airport pricing policies under various types of competition, considering both per-passenger and per-flight charges at congested airports. We show that an airport requires both pricing instruments to achieve the first-best outcome, and we distinguish their role by showing that congestion externalities need to be addressed through per-flight tolls whereas the inefficiency caused by airlines’ market power exertion must be corrected with per-passenger subsidies. We also show that Bertrand competition with differentiated products, a type of behavior recently pointed out by the empirical literature as pertinent, has policy implications that diverge from analyses that assume Cournot competition. The welfare gains and congestion reductions of congestion pricing would be higher than what has been advanced before; the degree of self-financing of airport infrastructure under optimal pricing would be increased and may approach exact self-financing; and the implied differentiation of charges between (asymmetric) airlines would be significantly smaller, presumably enhancing the political feasibility of welfare maximizing congestion pricing, as the potential distributional concerns would be decreased. Finally, we numerically analyze second-best policies, and find that atomistic pricing may offer a relatively attractive alternative to first-best congestion pricing.

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