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Trip Chaining: Who Wins Who Loses?

Author

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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.

Suggested Citation

  • Andre de Palma & Dunkerley Fay, 2006. "Trip Chaining: Who Wins Who Loses?," Energy, Transport and Environment Working Papers Series ete0605, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0605
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Russo, Antonio, 2013. "Voting on road congestion policy," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 707-724.
    3. Dunkerley Fay & Andre de Palma & Proost Stef, 2005. "Asymmetric Duopoly in Space - what policies work?," Energy, Transport and Environment Working Papers Series ete0509, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    4. 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.
    5. 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.
    6. 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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    More about this item

    Keywords

    trip chaining; discrete choice model; general equilibrium model; imperfect competition; wage competition;
    All these keywords.

    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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