The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 17

If airlines are required to pay landing fees that are adjusted to take account of the level of particular aircrafts' noise emissions, the time of day or night when they land, and the density of the residential population in the vicinity of the airport, how will airlines take steps to reduce the impact of their operations on homeowners who live near airports?
(a) A government agency calculated for each of 23 airports the decline in the annual rental value of surrounding property due to noise, and divided this total by the number of takeoffs and landings during the year. The highest average was $196.67 for New York's La Guardia; the lowest was the Portland, Oregon, airport, with a cost of $0.82 per takeoff or landing. This means that each takeoff or landing imposed a combined cost of almost $200 on La Guardia's neighbors, but less than a dollar on all those living around the Portland airport. Will airlines find it in their interest to use some airports more than they now do, and others less, if their landing and takeoff fees are increased by these amounts?
(b) Will airlines be more likely to install retrofitted noise-control gear or buy new and quieter planes if they must pay higher fees for noisier aircraft? Respond to the argument that "no airline is going to scrap an expensive plane just to save a few $400 airport surcharges." Is this critic of surcharges thinking marginally?
(c) How would such a system of surcharges induce airlines to fly their noisier planes to Portland and their quieter ones to New York City, or to use Dulles Airport rather than National when flying into Washington, D.C.? (Dulles, which is far out in the Virginia countryside, showed a cost of $5.64 per operation in the study.)