ECONOMIC ANALYSIS OF INTERNATIONAL HUB AIRPORTS

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While the externality effect is larger, the utility fee becomes larger yet income-tax rate becomes smaller. This result is clearly opposite to the standard argument. If its own trip's externality effect for its own economy is greater relative to the foreigner's, the utility fee becomes larger yet income-tax rate becomes smaller. That is, if the foreign travelers are more important, income-tax rate should be higher in order to reduce airport utility fee and capture foreigner's demand. In some sense, this accords with the standard argument. If the other country's basic productivity goes up, income-tax rate decreases rapidly while the utility as well as utility fee increases a little. That is, a neighboring country's economic growth gives positive externality to the home country through hub airport competition. If the other country's population goes up, income-tax rate decreases while the utility fee increases a little. That is, a neighboring country's large population gives large revenue to the home country's budget. Thus, it can reduce the income-tax rate. If consumers prefer own country's airport more, the utility fee goes up while income-tax rate down. According to the "globalization, " people tend to ignore the "nationality" of airports recently. If it is the case, the standard argument may be justifiable.