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Trip chaining: who wins who loses?

André de Palma (), Fay Dunkerley and Stef Proost

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

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)
Date: 2006-03
New Economics Papers: this item is included in nep-dcm and nep-mic
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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https://lirias.kuleuven.be/bitstream/123456789/121062/1/Dps0607.pdf

Related works:
Journal Article: Trip Chaining: Who Wins Who Loses? (2010) Downloads
Working Paper: Trip chaining: Who wins who loses? (2008) Downloads
Working Paper: Trip chaining: who wins who loses? (2006) Downloads
Working Paper: TRIP CHAINING: WHO WINS WHO LOSES? (2006) Downloads
Working Paper: Trip chaining - who wins, who loses? (2005) Downloads
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