No Access

AIR TRANSPORTATION SERVICES: BOTH A TRADED COMMODITY AND A TRANSACTIONS COST IN INTERNATIONAL TRADE

KENNETH BUTTON

Research Center School of Public Policy, George Mason University (MS 3C6) Fairfax, VA 22030, USA

Director of the Center for Transportation, Policy, Operations and Logistics, and Director of the Aerospace Policy.

https://doi.org/10.1142/S1793993310000093Cited by:6 (Source: Crossref)

Abstract

Air transportation is a major facilitator of international trade in terms of the value of goods and services involved, and is important to specific industries, such as tourism, that are being developed by many lower income countries. High air transportation costs can pose a major impediment to the economic growth of countries, or to regions within them. But international air transportation is also an industry in its own right that can earn profits and foreign exchange for the parenting country. The newer international trade models treat transportation as a transactions cost, reductions of which confer in most cases, a gain to trading partners. Reducing air transportation costs, if resulting from rent seeking activities in protected markets, can, however reduce income for the air transportation-providing country and may impact on its foreign exchange earnings. This can reduce the incentive for a country to participate in Open Skies type situations where international air services are offered in a competitive market. Furthermore liberal trade in air transportation services can, in some cases lead to potentially less efficient provision of these services.

Keywords:

JEL: F13, L93, O19

References

Brattle Group , The Economic Impact of an EU-US Open Aviation Area ( Brattle Group , Washington, DC , 2002 ) . Google Scholar
K. J. Button, Ocean Yearbook 16, eds. W. Mann Borgese, A. Chircop and M. McConnell (Chicago University Press, Chicago, 2002) pp. 328–353. Google Scholar
K. J. Button, The European Union; Economics and Politics, 8th edn., ed. A. M. El-Agraa (Cambridge University Press, Cambridge, 2007) pp. 298–313. Google Scholar
K. J. Button, Aviation Infrastructure Performance: A Study in Comparative Political Economy, eds. C. Winston and G. de Rus (Brookings Institution, Washington DC, 2008) pp. 193–221. Google Scholar
K. J. Button, Journal of Air Transport Management 15, 59 (2009), DOI: 10.1016/j.jairtraman.2008.09.010. Crossref, Google Scholar
K. J. Button and H. Vega, International Journal of Transport Economics 31, 341 (2006). Google Scholar
K. J. Button and H. Vega, GeoJournal 71, 67 (2008), DOI: 10.1007/s10708-008-9116-1. Crossref, Google Scholar
K. J. Button and S. Y. Taylor, Journal of Air Transport Management 6, 209 (2000), DOI: 10.1016/S0969-6997(00)00015-6. Crossref, Google Scholar
K. J. Buttonet al., Journal of Air Transport Management 5, 53 (1999), DOI: 10.1016/S0969-6997(98)00038-6. Crossref, Google Scholar
F. Y. Edgeworth , Mathematical Physics ( Kegan Paul , London , 1881 ) . Google Scholar
C. Foster and J. Golay, Journal of Transport Economics and Policy 20, 191 (1986). Google Scholar
D. H. Good, L. H. Röller and R. C. Sickles, European Journal of Operations Research 80, 508 (1995), DOI: 10.1016/0377-2217(94)00134-X. Crossref, Google Scholar
D. Greenaway and C. R. Milner, Review of World Economics 142, 425 (2006), DOI: 10.1007/s10290-006-0084-6. Crossref, Google Scholar
Hamilton BA (2007). The Economic Impacts of an Open Aviation Area between the EU and the US, Brussels, TREN/05/MD/S07.52650, European Commission . Google Scholar
International Civil Aviation Organisation (2009). Overview of Trends and Developments in International Air Transport, http://www.icao.int/icao/en/atb/epm/Index.html . Google Scholar
P. Krugman, Journal of International Economics 9, 469 (1979), DOI: 10.1016/0022-1996(79)90017-5. Crossref, Google Scholar
E. Maillebiau and M. Hansen, Journal of Transport Economics and Policy 29, 115 (1996). Google Scholar
S. Morrison and C. Winston , The Evolution of the Airline Industry ( Brookings Institution , Washington DC , 1995 ) . Google Scholar
Organisation for Economic Cooperation and Development , The Future of International Air Transport Policy: Responding to Global Change ( OECD, Paris , Paris , 1997 ) . Google Scholar
Oum, TH, WG Walters and JS Yong (1990). A Survey of Recent Estimates of Price Elasticities of Demand for Transport. Washington DC: World Bank Policy Research Working Papers . Google Scholar
M. E. Porter , Competitive Advantage: Creating and Sustaining Superior Performance ( Free Press , New York , 1985 ) . Google Scholar
L. G. Telser , Economic Theory and the Core ( University of Chicago Press , Chicago , 1978 ) . Google Scholar
G. H. K. Wang, W. Maling and E. McCarthy, Transportation Research A 15, 249 (1981), DOI: 10.1016/0191-2607(81)90006-6. Crossref, Google Scholar
World Trade Organisation , Air Transport and the GATS: 1995-2000 in Review ( WTO , Geneva , 2006 ) . Crossref, Google Scholar
Y. Yamaguchi, Transportation Research E 44, 653 (2008), DOI: 10.1016/j.tre.2007.05.006. Crossref, Google Scholar