Preventing competition because of “solidarity”: Rhetoric and reality of airport investments in Spain

Abstract

Spain is the only large European country in which airport management is strictly centralized and publicly owned. This peculiar institutional setting prevents competition among Spanish airports, and policy makers and bureaucrats in charge of the system regularly justify it on grounds of interterritorial solidarity. This paper tests whether allocation of investments in airports is effectively based on redistributive purposes, as claimed and looks at other factors to explain such allocation. Our empirical analysis suggests that neither a progressive redistribution target nor the scale economies criterion explain allocation decisions. Instead, we find that political factors have significant influence on the allocation decisions made by the government.Public Enterprise, Legal monopolies, Air Transportation, Models with Panel Data