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Abstract
This paper applies a stochastic cost frontier model to a panel of 54 major airports over 2002-2008
to examine how the two dominant governance forms of publicly owned airports in the United States
and Canada, namely, operation and governance by a government (city, county, or state) branch,
or by an airport authority, affect airport efficiency performance. Our key findings are (a) airports
operated by an airport authority achieve higher cost efficiency (on average, 14% higher technical
efficiency) than those operated by a government branch; (b) airports operated by a government
branch have lower labor share than those operated by an airport authority; and (c) there is no
statistically significant difference in the efficiency performance between airports operated by U.S.
airport authorities and Canadian airport authorities.