An analysis of airport–airline vertical relationships with risk sharing contracts under asymmetric information structures |
| |
Institution: | 1. Dipartimento di Scienze di Base e Applicate per l’Ingegneria, “Sapienza” Università di Roma, Italy;2. Dipartimento di Scienze Statistiche, “Sapienza” Università di Roma, Italy;1. Department of Physics, University Institute of Technology, The University of Burdwan, Burdwan 713104, India;2. Department of Physics, The University of Burdwan, Burdwan 713104, India;1. School of Economics & Business Administration, Chongqing University, Chongqing 400044, PR China;2. School of Information Technology, Jiangxi University of Finance and Economics, Nanchang 330013, PR China |
| |
Abstract: | We analyze the double moral hazard problem at the joint venture type airport–airline vertical relationship, where two parties both contribute efforts to the joint venture but neither of them can see the other’s efforts. With the continuous-time stochastic dynamic programming model, we show that by the de-centralized utility maximizations of two parties under very strict conditions, i.e., optimal efforts’ cost being negligible and their risk averse parameters both asymptotically approaching to zero, the vertical contract could be agreed as the optimal sharing rule, which is the linear function of the final state with the slope being the product of their productivity difference and uncertainty (diffusion rate) level index.If both parties’ productivities are same, or the diffusion rate of the underlying process is unity, optimal linear sharing rule do not depend on the final state. If their conditions not dependent on final state are symmetric as well, then risk sharing disappears completely. In numerical examples, we illustrate the complex impact of uncertainty increase and end-of-period load factor improvement on the optimal sharing rule, and the relatively simple impact on total utility levels. |
| |
Keywords: | Airport–airline vertical relationship Load factor guarantee mechanism Double hidden action/moral hazard Risk sharing Stochastic dynamic programming |
本文献已被 ScienceDirect 等数据库收录! |
|