Factor substitution and complementarity in the Asia airports industry

• Main Authors: LOW, Joyce M. W., TANG, Loon Ching
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2006
• Subjects: Elasticities of factor substitutions; Airport operations efficiency; Outsourcing; Asian Studies; Operations and Supply Chain Management; Transportation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/4581; https://doi.org/10.1016/j.jairtraman.2006.07.003
• Institution: Singapore Management University

This paper measures and analyzes how the substitutability between various factors in Asia airports has changed over the years. Production factors are decomposed into capital and labor to examine the role of outsourcing in the recent years. The results reveal that outsourcing has emerged from being a substitute for labor and a complementary factor to capital in the late 1990s to become a substitute for both labor and capital. Increases in price elasticities and substitutability of labor and capital indicate that airports in Asia have become more adept at reacting to price changes.