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Public Transit Capacity and User’s Choice: AnExperiment on Downs-Thomson Paradox

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  • Laurent Denant-Boemont

    (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 Working Papers with number halshs-00405501.

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Date of creation: 10 Jun 2009
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Handle: RePEc:hal:wpaper:halshs-00405501

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Keywords: traffic equilibrium; public transit; congestion; experimental economics; market entry game;

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  1. John Duffy & Ed Hopkins, 2010. "Learning, Information and Sorting in Market Entry Games: Theory and Evidence," Levine's Working Paper Archive 506439000000000355, David K. Levine.
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  9. Erev, Ido & Rapoport, Amnon, 1998. "Coordination, "Magic," and Reinforcement Learning in a Market Entry Game," Games and Economic Behavior, Elsevier, vol. 23(2), pages 146-175, May.
  10. Andersson, Ola & Carlsson, Hans & Holm, Håkan, 2006. "Endogenous Communication and Tacit Coordination in Market Entry Games - An explorative experimental study," Working Papers 2006:12, Lund University, Department of Economics.
  11. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon, 2008. "Reciprocity in Ultimatum and Dictator Games: An Introduction," Handbook of Experimental Economics Results, Elsevier.
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  13. Arnott, R. & De Palma, A. & Lindsey, R., 1992. "Properties of Dynamic Traffic Equilibrium Involving Bottlenecks, Including A Paradox and Metering," Papers 9201, Universite Libre de Bruxelles - C.E.M.E..
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