Airport privatization: A simple welfare analysis

Abstract

The interest in privatization is not new to the world nor the study of economies, for that matter. The paper contains a critique of both proponent and opponent groups of economists and policy makers who deal with the issue of airport privatization. These groups primarily rely on anecdotal evidence to support their positions. At present, privatization can only be accepted or rejected on the basis of theory, politics, or ideology. In this paper a mathematical model and decision rule based on welfare analysis are developed that facilitate the process for transition of airports from a public enterprise to a private one.