Network structure, capacity growth and control: the case of China's air traffic system revisited

Abstract

Recent applications of Cournot models suggest that fully connected networks are less costly and more welfare-efficient as compared to hub-and-spokes in China’s rapidly expanding air traffic system (ATS). The author applies agent-based heuristics to demonstrate that the complexity of China’s ATS can: 1) be decomposed into meaningful components; 2) be graphically depicted as such; 3) not only determine whether HS are in fact dominant or not, but also identify intermediary or more developed forms of HS; 4) make both plausible and coherent inferences about the overall strategy of China’s aviation policy. One salient theme that underlies such heuristics is that of path dependency and evolutionary development. Theories related to market liberalisation, entry/exit to the industry or competition versus cooperation – including their spatial dimension – can thus be put into perspective within the complex context of Chinese ATS.