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Trip chaining: who wins who loses?

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Author Info
André de Palma
Fay Dunkerley
Stef Proost

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Abstract

In this paper we study how trip chaining affects the pricing and equilibrium number of firms. We use a monopolistic competition model where firms offer differentiated products as well as differentiated jobs to households who are all located at some distance from the firms. Trip chaining means that shopping and commuting can be combined in one trip. The symmetric equilibriums with and without the option of trip chaining are compared. We show analytically that introducing the trip chaining option can, in the short run, only decrease the profit margin of the firms and will increase welfare. The welfare gains are however smaller than the transport cost savings. In the long run, with free entry, the number of firms decreases but welfare with trip chaining possible is still higher than when it is excluded. A numerical illustration gives orders of magnitude of the different effects.

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0607.

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Date of creation: Mar 2006
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Handle: RePEc:ete:ceswps:ces0607

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Related research
Keywords: trip chaining; discrete choice model; general equilibrium model; imperfect competition; wage competition.;

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
R3 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Recker, W. W. & Chen, C. & McNally, M. G., 2001. "Measuring the impact of efficient household travel decisions on potential travel time savings and accessibility gains," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(4), pages 339-369, May. [Downloadable!] (restricted)
  2. Bhat, Chandra R. & Frusti, Teresa & Zhao, Huimin & Schönfelder, Stefan & Axhausen, Kay W., 2004. "Intershopping duration: an analysis using multiweek data," Transportation Research Part B: Methodological, Elsevier, vol. 38(1), pages 39-60, January. [Downloadable!] (restricted)
  3. Claycombe, Richard J. & Mahan, Tamara E., 1993. "Spatial aspects of retail market structure beef pricing revisited," International Journal of Industrial Organization, Elsevier, vol. 11(2), pages 283-291, June. [Downloadable!] (restricted)
  4. André de Palma & Fay Dunkerley & Stef Proost, 2006. "Trip chaining: who wins who loses?," Center for Economic Studies - Discussion papers ces0607, Katholieke Universiteit Leuven, Centrum voor Economische Studiën. [Downloadable!]
    Other versions:
  5. Bhat, Chandra R. & Singh, Sujit K., 2000. "A comprehensive daily activity-travel generation model system for workers," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(1), pages 1-22, January. [Downloadable!] (restricted)
  6. Raith, Michael, 1996. "Spatial retail markets with commuting consumers," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 447-463, June. [Downloadable!] (restricted)
  7. Golob, Thomas F., 2000. "A simultaneous model of household activity participation and trip chain generation," Transportation Research Part B: Methodological, Elsevier, vol. 34(5), pages 355-376, June. [Downloadable!] (restricted)
  8. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation, Yale University. [Downloadable!]
  9. Eaton, B Curtis & Lipsey, Richard G, 1982. "An Economic Theory of Central Places," Economic Journal, Royal Economic Society, vol. 92(365), pages 56-72, March. [Downloadable!] (restricted)
  10. Simon P. Anderson & Andre de Palma & Jacques-Francois Thisse, 1987. "Demand for Differentiated Products," Discussion Papers 726, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  11. Arun Kuppam & Ram Pendyala, 2001. "A structural equations analysis of commuters' activity and travel patterns," Transportation, Springer, vol. 28(1), pages 33-54, February. [Downloadable!] (restricted)
  12. Bhat, Chandra R., 2008. "The multiple discrete-continuous extreme value (MDCEV) model: Role of utility function parameters, identification considerations, and model extensions," Transportation Research Part B: Methodological, Elsevier, vol. 42(3), pages 274-303, March. [Downloadable!] (restricted)
  13. J Rouwendal & P Rietveld, 1999. "Prices and opening hours in the retail sector: welfare effects of restrictions on opening hours," Environment and Planning A, Pion Ltd, London, vol. 31(11), pages 2003-2016, November. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. André De Palma & Fay Dunkerley & Stef Proost, 2008. "Trip chaining: Who wins who loses?," Working Papers hal-00348451_v1, HAL. [Downloadable!]
    Other versions:
  2. Dunkerley Fay & Andre de Palma & Proost Stef, 2005. "Asymmetric Duopoly in Space - what policies work?," Energy, Transport and Environment Working Papers Series ete0509, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment. [Downloadable!]
    Other versions:
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