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Trip Chaining: Who Wins Who Loses?

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  • Andre de Palma

    ()
    (Université de Cergy-Pontoise, ENPC and Member of Institut Universitaire de France, THEMA, 33)

  • Dunkerley Fay

    ()
    (K.U.Leuven-Center for Economic StudiesAuthor-Name: Proost Stef
    K.U.Leuven-Center for Economic Studies; UCL - CORE)

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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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0605.

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Length: 28 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:ete:etewps:ete0605

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

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References

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  1. Andre de Palma & Stef Proost & Fay Dunkerley, 2004. "Imperfect Competition and Congestion in a City with asymmetric subcenters," Energy, Transport and Environment Working Papers Series ete0411, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  2. Anderson,S.P. & de Palma,A., 1995. "Product Diversity in Asymmetric Oligopoly:Is the Quality of Consumer Goods Too Low?," Papers 9521, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  3. 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.
  4. Andre de Palma & Dunkerley Fay, 2006. "Trip Chaining: Who Wins Who Loses?," Energy, Transport and Environment Working Papers Series ete0605, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
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  10. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
  11. David Hensher & April Reyes, 2000. "Trip chaining as a barrier to the propensity to use public transport," Transportation, Springer, vol. 27(4), pages 341-361, December.
  12. 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.
  13. 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.
  14. Kay Axhausen & Andrea Zimmermann & Stefan Schönfelder & Guido Rindsfüser & Thomas Haupt, 2002. "Observing the rhythms of daily life: A six-week travel diary," Transportation, Springer, vol. 29(2), pages 95-124, May.
  15. Arun Kuppam & Ram Pendyala, 2001. "A structural equations analysis of commuters' activity and travel patterns," Transportation, Springer, vol. 28(1), pages 33-54, February.
  16. Raith, Michael, 1996. "Spatial retail markets with commuting consumers," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 447-463, June.
  17. 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.
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Citations

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Cited by:
  1. André De Palma & Fay Dunkerley & Stef Proost, 2005. "Trip chaining - who wins, who loses?," ERSA conference papers ersa05p496, European Regional Science Association.
  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.
  3. Russo, Antonio, 2013. "Voting on road congestion policy," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 707-724.
  4. Takahashi, Takaaki, 2013. "Agglomeration in a city with choosy consumers under imperfect information," Journal of Urban Economics, Elsevier, vol. 76(C), pages 28-42.

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