TRIP CHAINING: WHO WINS WHO LOSES?

André de Palma () and Dunkerley Fay ()
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Dunkerley Fay: K.U.Leuven-Center for Economic StudiesAuthor-Name: Proost Stef

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

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.

Keywords: trip chaining; discrete choice model; general equilibrium model; imperfect competition; wage competition (search for similar items in EconPapers)
JEL-codes: D43 L13 R3 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-03
New Economics Papers: this item is included in nep-dcm, nep-mic and nep-ure
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https://lirias.kuleuven.be/bitstream/123456789/543604/1/ETE-WP-2006-05.pdf (application/pdf)

Related works:
Journal Article: Trip Chaining: Who Wins Who Loses? (2010)
Working Paper: Trip chaining: Who wins who loses? (2008)
Working Paper: Trip chaining: who wins who loses? (2006)
Working Paper: Trip chaining: who wins who loses? (2006)
Working Paper: Trip chaining - who wins, who loses? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0605

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