<p><p>This paper examines the application of price-cap regulation to the UK airport industry, with particular reference to the expansion of London-Stansted. This expansion is relevant to the debate concerning investment incentives inherent in the RPI-X approach and whether the UK style of regulation encourages the 'sweating of assets' at the expense of new investment. Stansted's expansion also suggests a willingness of the authorities to accept the leveraging of market power in pursuit of perceived public-interest goals; it provides an insight into the behaviour of economic agents when capital market disciplines are mute; and it illustrates some unintended consequences that can follow from market intervention.</p></p>
Authors
David Starkie
Journal article details
- ISSN
- Print: 0143-5671 Online: 1475-5890
- JEL
- L51, L93, L97, R48
- Issue
- December 2004
Suggested citation
Starkie, D. (2004). 'Testing the regulatory model: the expansion of Stansted airport' (2004)
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