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 économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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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)
Date: 2009-07-02
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00406223v1
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Citations: View citations in EconPapers (1)

Published in 4th Kuhmo-Nectar Conference “transport and urban economics”, Jul 2009, copenhagen, Denmark

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Working Paper: Public Transit Capacity and Users Choice: AnExperiment on Downs-Thomson Paradox (2009)
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