Question: 4 LaGuardia airport is one of three major airports that serve New York City. The heavy demand for flights to and from the airport has caused systematic delays. The entry of new carriers and expansion of service by existing carriers would increase the congestion. In 2000, the airport authority decided to allocate a limited number of new takeoff and landing slots among the various airlines by lottery. Incumbent carriers that had been allocated slots were allowed to retain them.

(A) With a limited number of takeoff and landing slots allocated among the various airlines by lottery, which condition for economic efficiency might be violated?

(B) Explain how the following measures would increase efficiency: (i) giving the incumbent carriers ownership over their slots and allowing them to lease or sell their slots, (ii) Auctioning the right to new slots.