Abstract

This thesis argues that formal liberalization of service sectors is only a necessary but not a sufficient condition for increased competition. Service providers demand and governments supply providers with a certain level of protection, particularly in the form of financial state aid. On the basis of rent seeking and collective action considerations I argue that the level of protection partly depends upon the political power of established providers who defend their dominant position against potential rivals. These considerations are directly applied to the air transport sector of the European Union and empirically tested by means of ordered logit regression models. The results support the theoretical expectation that protectionism and hence the gap between liberalization and competition prevails particularly in markets where governments and airlines are closely connected in terms of equity stakes and personnel.

Abstract

Summary. This paper deals with public service obligation, a form of state aid that applies to air services. The paper first provides general information on the European legislation applying to this form of state aid, and elaborates the legal framework and general principles. The second part is dedicated to a comparison of a similar subsidizing programme in the USA and Australia. An examination of current imposed public serviceobligation routes in Europe is provided in the following section. The coefficients defining the number of imposed PSO routes per various geo-economic variables have been defined. Document type: Article