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Public Transit Capacity and Users' Choice: AnExperiment on Downs-Thomson Paradox

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  • Laurent Denant-Boèmont

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)

  • Sabrina Hammiche

    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)

Abstract

We study the Downs-Thomson paradox, a situation where an additional road capacitycan cause an overall increase in transport generalized cost and therefore a decrease in welfarefor transport users. To this end, we build an experiment based on a double market-entrygame (DMEG) where users have to choose between road and public transit after that the op-erator has choosen public transit capacity. The optimal strategy for operator is to minimizecapacity, and the equilibrium for users depend on the endogeneous public transit capacitycompared to exogeneous road capacity. The most important result is that we observe theDowns-Thomson paradox empirically in the laboratory: An increase in road capacity causesshift from road to rail and, at the end, increases total travel costs. But the contrary isnot true: A decrease in road capacity does not cause lower total travel costs, which is incontradiction with our theoretical model. Results also show that the capacity chosen byoperator di¤ers from Nash prediction, levels being signi cantly higher than those predictedby our model. Moreover, users coordinate remarkably well on Nash equilibrium entry ratewhile capacity has been chosen by operator.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00406223.

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Date of creation: 02 Jul 2009
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Publication status: Published - Presented, 4th Kuhmo-Nectar Conference “transport and urban economics”, 2009, copenhagen, Denmark
Handle: RePEc:hal:journl:halshs-00406223

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Related research

Keywords: traffic equilibrium; congestion; market entry game; coordination; experimental economics;

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  11. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
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