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Trip Chaining: Who Wins Who Loses?

  • 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)

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, 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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  1. Anderson, Simon P & de Palma, Andre, 2001. "Product Diversity in Asymmetric Oligopoly: Is the Quality of Consumer Goods Too Low?," Journal of Industrial Economics, Wiley Blackwell, vol. 49(2), pages 113-35, June.
  2. 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, 03.
  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. André de Palma & Fay Dunkerley & Stef Proost, 2006. "Imperfect Competition and Congestion in a City with Asymmetric Subcentres," Chapters, in: Spatial Dynamics, Networks and Modelling, chapter 16 Edward Elgar.
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  10. 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.
  11. Raith, Michael, 1996. "Spatial retail markets with commuting consumers," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 447-463, June.
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  14. 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.
  15. 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.
  16. Arun Kuppam & Ram Pendyala, 2001. "A structural equations analysis of commuters' activity and travel patterns," Transportation, Springer, vol. 28(1), pages 33-54, February.
  17. 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.
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