Analyze and asses the economic effects of regulation on passenger vs Essay

Analyze and asses the economic effects of regulation on passenger vs. freight transportation - Essay Example This is when aspects of comparison are enforced in the market and the targeted performance by the airline companies. This paper analyzes and assesses the economic effects of regulation on passenger versus freight transportation. In the field of economics, once supply is reduced the tendency for price increase to be introduced is always very high. Regulations that inhibit airlines from taking a certain route within a timeline result in choked supply of the goods that are required. This means that there are people that want to travel and transport their goods from one area to the next. They are not able to do so because government regulations restrict them. The people and the goods have to be transported within set timelines. This results in so many people wanting to travel. In other cases, the flow of goods is hampered especially if the goods are perishable in nature. At this point, it is the mandate of the airline company to increase the air fares thus reducing the demand for the service. This means that if governments allowed airline companies to travel to regions as many times as they would want to, the demand would be evenly spread. This will also translate to cheaper airfares for anyone using the servic e (Abramowitz & Brown, 1993). In many instances, regulation has been viewed as a form of any government’s effort to reduce the number of people and goods using air transport. This is because many of them do not have the structural capacity to deal with the ever emerging need for transportation. Economically, this results in over congestion of other forms of transport and reduced revenue generation from the air companies. The aspect of coordination and relationships is greatly affected by the fact that regulations have been perceived as a form of dictatorial governance. This is a headache for very many governments and their transport systems. It is necessary to note that regulations affect economic relations between nations by stipulating the terms