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Trip chaining: who wins who loses?

Author

Listed:
  • André de Palma
  • Fay Dunkerley
  • Stef Proost

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.

Suggested Citation

  • André de Palma & Fay Dunkerley & Stef Proost, 2006. "Trip chaining: who wins who loses?," Working Papers of Department of Economics, Leuven 543604, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:543604
    Note: paper number ETE WP 2006-05
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    File URL: https://lirias.kuleuven.be/retrieve/c191f467-d164-4cd6-b3f7-617827d00a30
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    Cited by:

    1. is not listed on IDEAS
    2. Arthur (Yan) Huang & David Levinson, 2015. "Axis of travel: Modeling non-work destination choice with GPS data," Working Papers 000113, University of Minnesota: Nexus Research Group.
    3. Russo, Antonio, 2013. "Voting on road congestion policy," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 707-724.
    4. Huang, Arthur & Levinson, David, 2017. "A model of two-destination choice in trip chains with GPS data," Journal of choice modelling, Elsevier, vol. 24(C), pages 51-62.
    5. Andre De Palma & Fay Dunkerley & Stef Proost, 2010. "Trip Chaining: Who Wins Who Loses?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(1), pages 223-258, March.
    6. André De Palma & Fay Dunkerley & Stef Proost, 2005. "Asymmetric Duopoly in Space - what policies work?," ERSA conference papers ersa05p494, European Regional Science Association.
    7. Takahashi, Takaaki, 2013. "Agglomeration in a city with choosy consumers under imperfect information," Journal of Urban Economics, Elsevier, vol. 76(C), pages 28-42.

    More about this item

    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - 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, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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