Public Transit Capacity and Users' Choice: AnExperiment on Downs-Thomson Paradox

Laurent Denant-Boèmont () and Sabrina Hammiche
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Sabrina Hammiche: CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen

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Abstract: We study the Downs-Thomson paradox, a situation where an additional road capacitycan cause an overall increase in transport generalized cost and therefore a decrease in welfarefor transport users. To this end, we build an experiment based on a double market-entrygame (DMEG) where users have to choose between road and public transit after that the op-erator has choosen public transit capacity. The optimal strategy for operator is to minimizecapacity, and the equilibrium for users depend on the endogeneous public transit capacitycompared to exogeneous road capacity. The most important result is that we observe theDowns-Thomson paradox empirically in the laboratory: An increase in road capacity causesshift from road to rail and, at the end, increases total travel costs. But the contrary isnot true: A decrease in road capacity does not cause lower total travel costs, which is incontradiction with our theoretical model. Results also show that the capacity chosen byoperator di¤ers from Nash prediction, levels being signi cantly higher than those predictedby our model. Moreover, users coordinate remarkably well on Nash equilibrium entry ratewhile capacity has been chosen by operator.

Keywords: traffic equilibrium; congestion; market entry game; coordination; experimental economics (search for similar items in EconPapers)
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Date: 2009-07-02
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00406223/en/
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Published - Presented, 4th Kuhmo-Nectar Conference “transport and urban economics”, 2009, copenhagen, Denmark

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Related works:
Working Paper: Public Transit Capacity and User’s Choice: AnExperiment on Downs-Thomson Paradox (2009)
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