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Trip chaining: Who wins who loses?

Author

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  • André de Palma

    (ENS Cachan - École normale supérieure - Cachan, X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Fay Dunkerley

    (KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven)

  • Stef Proost

    (KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven)

Abstract

This paper studies how trip chaining (combining commuting and shopping or commuting and child care) affects market competition: in particular, pricing and the equilibrium number of firms as well as welfare. We use a monopolistic competition framework, where firms sell differentiated products as well as offering differentiated jobs to households, who are all located at some distance from the firms. The symmetric equilibria with and without the option of trip chaining are compared. We show analytically that introducing the trip chaining option reduces the profit margin of the firms in the short run, but increases welfare. The welfare gains are, however, smaller than the transport cost savings. In the free-entry long run equilibrium, the number of firms decreases but welfare is higher. A numerical illustration gives orders of magnitude of the different effects.

Suggested Citation

  • André de Palma & Fay Dunkerley & Stef Proost, 2008. "Trip chaining: Who wins who loses?," Working Papers hal-00348451, HAL.
    • Handle: RePEc:hal:wpaper:hal-00348451
    Note: View the original document on HAL open archive server: https://hal.science/hal-00348451
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    References listed on IDEAS

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    1. 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.
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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; imperfect competition; wage and price 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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