Abstract
In this chapter, we present two recent developments regarding congestion in transport nodes and nodal systems. The first development focuses on the congestion that is related to airlines’ baggage policies, and its implications on the relationship between airport congestion internalization and airlines’ market power. We find that irrespective of the market structure of airlines, airlines will always offer fewer checked bags than the socially optimal level. However, the oligopoly equilibrium checked bag volume might be higher or lower than the monopoly volume. The second development focuses on two transport nodes that are linked together by the congestion “knock-on” effect. We find that with the presence of the knock-on effect, liners will operate less in terminals, and an increase in a liner's operation in one terminal will decrease its operation in another. Furthermore, whether the profit-maximizing terminal charges are set at higher or lower levels than the overall optimal terminal charges depends on the magnitude of the knock-on effect.
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