André de Palma

Ecole normale supérieure de Cachan | ENS Cachan · Department of Economics and Management

We introduce the inverse product differentiation logit (IPDL) model, a micro-founded inverse market share model for differentiated products that captures market segmentation according to one or more characteristics. The IPDL model generalizes the nested logit model to allow richer substitution patterns, including complementarity in demand, and can...

We model imperfect governments with public choices that are sequential, myopic and not free of error. We first use this framework to explore governmental incremental budgeting. We argue that a model of bounded rationality is required to capture the empirical reality of incremental budgeting. We then provide a model that integrates bounds errors and...

Tradable credit schemes (or tolling in tokens) are a form of quantity control, which promise to be an appealing alternative to congestion pricing (or tolling in dollars) owing to considerations of revenue neutrality, equity, reduced infrastructure costs, and political acceptability. The comparative performance of the two instruments under uncertain...

Road traffic is a major contributor to air pollution which is a serious problem in many large cities. Experience in London, Milan, and Stockholm indicates that road pricing can be useful in reducing vehicle emissions as well as congestion. This study uses a dynamic traffic network simulator that models choices of mode, departure time, and route to...

Carpooling is an efficient measure to fight car ownership and reduce vehicle kilometres travelled. By individuals sharing their commutes, vehicle occupancy increases and congestion is reduced. We develop a dynamic ADL (Arnott, de Palma, Lindsey)–Vickrey approach for a corridor monocentric city à la Hotelling. First, we formulate the matching proble...

Several works published over the last two decades have shown for a stylized set-up with homogeneous users that metering-based priority (MBP) schemes may generate Pareto improving departure time adjustments similar to those induced by congestion pricing, but without any financial transaction. We investigate whether MBP (i) still generates significan...

Households are often responsible for labour supply, time allocation, transportation and many other decisions. Yet, research in both economics and transportation was traditionally dominated by so-called unitary models that treat households as single decision-making units with a representative individual. This began to change with the development, in...

Transportation networks, such as railways, roads, and highways, provide standard examples of natural monopolies. Since the introduction of the term “natural monopoly” by T. Malthus in 1815, this concept has been defined in different ways by several authors (F. Bastiat, J.S. Mill, or L. Walras). The current formal definition is due to Baumol (1977)...

This paper establishes a general equivalence between discrete choice and rational inattention models. Matejka and McKay (2015) showed that when information costs are modelled using the Shannon entropy, the choice probabilities in the rational inattention (RI) model take the multinomial logit form. We show that, for one given prior over states, RI c...

It is well known that price and quantity regulation are not equivalent under uncertainty. This asymmetry has been a factor in the debate about whether to use taxes or Tradable Permit Schemes (TPS) for controlling greenhouse gas emissions. We analyze the allocative efficiency of a TPS for a congestible facility such as an airport, a road, a recreati...

Abstract. We model public choice in a number of cases where a govern- ment, since it cannot design an optimal policy as a whole, resorts to a sequen- tial, myopic approach; and which is not free of error. We use this framework to explore governmental budgeting and welfare economics. We develop various examples that clarify how the introduction of s...

The paper considers random utility models that use a single common vector of random utilities for the computation of best, worst and best–worst choice probabilities, i.e. consistent models. Choice probabilities are derived for two distributions of the random terms: i.i.d. extreme value, i.e. Logit, and multivariate normal, i.e. Probit. We prove str...

This paper models success probability in imperfectly discriminating contests involving multiple players and multiple prizes. This turns out to be a generalization of Tullock's contest success function to a multiplayer, multi-prize situation. The model can be used to analyse e orts exerted by individuals in various real-life situations, like obtaini...

This chapter is concerned with the analysis of departure times in dynamic bottleneck models. First, the case of a set of individual drivers is discussed through both deterministic and stochastic approaches. The analysis is then extended to a new model that combines small and large agents. In the stochastic setting, the focus is mainly on model buil...

Individual users of transportation facilities often control a significant share of total traffic. Examples include airlines, rail and maritime freight shippers, urban goods delivery companies, taxi companies, and ride-sharing companies. These users have an incentive to internalize the congestion delays their own vehicles impose on each other by adj...

We introduce bilateral risk aversion into the mixed adverse selection - moral hazard model of Laffont and Tirole (1986). The presence of exogenous risk interacts with the adverse selection problem in interesting ways. In particular, we show that it is never optimal to present the firm with a fixed price contract, that the efficient firm typically b...

We provide a bare–bones framework that uncovers the circumstances which lead either to the emergence of equally-spaced and equally-sized central places or to a hierarchy of central places. We show how these patterns reflect the preferences of agents and the efficiency of transportation and communication technologies. With one population of homogene...

We analyze couples mode choice, focusing on the interdependence of spouses’ decisions. We set up a discrete collective (cooperative) model in which spouses with competing objectives reach a Pareto optimal decision, and we apply it to Paris region. We estimate the determinants of the bargaining power (spouses’ age, nationality, type of job contract,...

The case for some form of congestion tolling has long been made given the extent of traffic congestion in most urban transportation networks. However, there is little consensus on whether this tolling should be in the form of dollars (traditional congestion pricing schemes or price regulation) or in the form of tokens (credit based mobility schemes...

This paper analyzes rivalry between transport facilities in a model that includes two sources of horizontal differentiation: geographical location and departure time. We explore how both sources influence facility fees and the price of the service offered by downstream carriers. Travelers’ costs include a fare, a transportation cost to the facility...

This paper establishes a general equivalence between discrete choice and rational inattention models. Matejka and McKay (2015, AER) showed that when information costs are modelled using the Shannon entropy function, the resulting choice probabilities in the rational inattention model take the multinomial logit form. By exploiting convex-analytic pr...

This paper studies the entry of a new competitor in a public transport network. Competitors for existing rail can be long distance buses but also the vanpool services. These new lines decrease the ridership of the existing lines and increase waiting time for its passengers. A stylized network model is used to study this potential vicious cycle. We...

We generalize Roy's identity for discrete choice models, focusing on the worst choices. To do so, we derive a relation between the expected minimum utility and the worst choice probabilities for additive random utility models. We extend this relationship to maxmin random utility models, applying this framework to model ambiguity in a discrete choic...

We model trip-timing decisions of rail transit users who trade off crowding costs and disutility from traveling early or late. With no fare or a uniform fare, ridership is too concentrated on timely trains. Marginal-cost-pricing calls for time-dependent fares that smooth train loads and generate more revenue than an optimal uniform fare. The welfar...

Le développement de la collecte des données massives crée de nouvelles opportunités pour les consommateurs, les opérateurs industriels et les chercheurs. Ce livre discute cette transition dans différents domaines, spécialement celui des transports. Les travaux présentés (billettique, consommation électrique, enquête smartphone, anonymisation des do...

Automated mobility on demand is foreseen as the future of urban passenger mobility. While mixed-traffic for autonomous and conventional vehicles could be considered, separation amplifies the benefits of automation. Combined with mobility as a service, separation also opens new possibilities in terms of demand management. We consider in this paper a...

This paper addresses the valuation of travel time reliability in the presence of endogenous congestion and the role of scheduling preferences. The bottleneck model of road congestion is amended by considering stochastic travel times. We thereby take into account the influence of travel time variability on the congestion profile. The cost of travel...

For random utility models and under very mild assumptions, using the inclusion–exclusion principle, we derive an identity which expresses the probability that an alternative is the worst choice within a finite set of alternatives as an alternating sum of best choice probabilities. Under slightly stronger assumptions on the distribution of the vecto...

This paper investigates the existence and uniqueness of equilibrium in the Vick-rey bottleneck model when each user controls a positive fraction of total traffic. Users simultaneously choose departure schedules for their vehicle fleets. Each user internalizes the congestion cost that each of its vehicles imposes on other vehicles in its fleet. We e...

This paper reviews and compares the performance of two dynamic transportation models – METROPOLIS and SILVESTER – which are used to predict the impacts of congestion charging for Stockholm. Both are mesoscopic dynamic models treating accumulation and dissipation of traffic queues, route choice, modal split and departure time choice. The models are...

The Transportation Elimination-by-Aspects (TEBA) framework, a new evaluation and decision making framework (and methodology) for large transportation projects, is proposed to elicit, structure and quantify the preferences of stakeholder groups across project alternatives. The decision rule used for group decision making within TEBA is the individua...

Historiquement la finance s'est principalement focalisée sur les produits financiers, en délaissant les investisseurs : il n'y a pas de « Quant » des investisseurs ! La profession devrait remédier à cette situation et utiliser les informations sur les choix passés, mais aussi sur les décisions prises dans le cadre de scénarii afin de mieux accompag...

On part souvent de l'hypothèse que les investisseurs sont rationnels : ils maximiseraient une fonction d'objectif unique (celle-ci exprime entre autres la compensation entre rendement et volatilité). Dans ce cadre, le conseil en investissement consiste :  à trouver les produits ou portefeuilles avec le meilleur couple risque-rendement et  à propo...

Historiquement la finance s'est principalement focalisée sur les produits financiers, en délaissant les investisseurs : il n'y a pas de « Quant » des investisseurs ! La profession devrait remédier à cette situation et utiliser les informations sur les choix passés, mais aussi sur les décisions prises dans le cadre de scénarii afin de mieux accompag...

Consider a population of agents who choose one among a set of destinations located along a rectilinear road. Each of these destinations has a certain utility, modeled by a random variable. We compare a situation where the agents have to explore the destinations to observe the value of their utilities, to a situation where they know these values bef...

We study risk aversion with the one-armed bandit problem where (for example) a driver selects, day after day, either a safe or a random road. Four information regimes are envisaged. The visionary driver knows, before hand, with certainty the travel time on the random road, while the locally informed driver needs to select a road to acquire informat...

We analyze trip-timing decisions of public transit users who trade off crowding costs and disutility from traveling early or late. Considering fixed and then endogenous demand, we derive the equilibrium distribution of users across trains for three fare regimes: no fare, an optimal uniform fare, and an optimal train-dependent fare that supports the...

La littérature regorge de travaux sur la fiabilité des transports individuels routiers, mais reste pauvre en ce qui concerne la fiabilité dans les transports en commun. Dans le domaine routier, la variabilité du temps de transport est la seule observation de la fiabilité, le voyageur choisissant son horaire de départ dans un ensemble de choix conti...

There is a large operations research literature on public transit system design. An extensive economic literature has also developed on public transit capacity investments, service frequency, and optimal pricing and subsidy policy. These two branches of literature have made significant advances in understanding public transit systems. However, in c...

Transportation facilities are prone to congestion because of peaks in travel demand, inflexibility of supply, and inability to store transport services. Urban road traffic congestion and congestion in air travel impose significant economic and social costs. Traditional policies to alleviate congestion such as building new roads have had limited suc...

We prove a general identity which states that any element of a tuple (ordered set) can be obtained as an alternating binomial weighted sum of rst elements of some sub-tuples. The identity is then applied within the random utility models framework where any alternative's ordered choice probability (the probability that it has a given rank) is expres...

A three-level nested logit model for the choice of residential location, workplace, and type of employment is used to assess the effect of an individual-specific measure of accessibility to employments that takes into account the attractiveness of different occupations when the choice of workplace is anticipated in the decision of residential locat...

Urban and transportation economics often require discrete decision making in risky situations.

On propose quelques réflexions sur la formulation des questions touchant les enjeux et les coûts des politiques sécuritaires. Cette formulation, comme on le montre un bref rappel historique, dépend fortement des instances qui s'expriment (particuliers, assureurs, commerçants, Puissance publique, etc.). De même, aujourd'hui, la reconnaissance du fai...

Residential location decision is often a household joint decision involving several decision-makers. These different decision-makers usually have diverging preferences, especially in dual-earner households, when spouses work at different locations. Since about half a century, literature on residential location has studied in great detail the influe...

This chapter presents the modeling and simulation works applying UrbanSimE in Paris case study. This is the most important application of UrbanSim worldwide with respect to the size of the region and of the project evaluated, data availability and complexity. The rich available data allowed us to make different econometric analyses and to implement...

There is substantial literature on modelling individual residential location choices. We restrict here our attention to some key aspects discussed below, which remain overlooked in the litterature. First, the set of decisions related to residential location in a multiperiod setting typically involve a very large number of alternatives. At a given d...

This paper discusses the formulation of crowding in public transport and its implications for pricing, seating capacity and optimal scheduling. An analytical model is used to describe the user equilibrium and the optimal equilibrium for different stylized conditions. For the one OD pair case with identical desired arrival time, we derive the optima...

Integrated transport and land use models are an increasingly used tool for evaluation of urban policy and large scale projects. Although there is a well-built theoretical background supporting the existing models, there are few exhaustive descriptions of the methodological implications and implementation efforts behind these tools.This handbook des...

A number of reflections are set out on the formulation of issues relating to the challenges and costs of security policies. This formulation process, as shown by a brief historical overview, varies significantly according to the persons or bodies expressing themselves (private individuals, insurers, businessmen, public authorities, etc.). Likewise,...

This paper investigates the cost of travel time variability for car users at the peak hour. In particular, we derive the marginal social cost of travel time variability, which takes the feedback of travel time unreliability on the congestion profile into account. This is in contrast with the value of travel time variability, which treats congestion...

The variability of travel time modifies the rush hour traffic and the cost of commuting. The bottleneck model of road congestion with fixed peak-load demand is augmented of an additive random delay. When individuals have (alpha-beta-gamma) preferences, there exists a unique Nash equilibrium. The variability of travel time leads to departure rates t...

Uncertainty pervades most aspects of life. From selecting a new technology to choosing a career, decision makers rarely know in advance the exact outcomes of their decisions. Whereas the consequences of decisions in standard decision theory are explicitly described (the decision from description (DFD) paradigm), the consequences of decisions in the...

There is still a long way to achieve the goal of providing a theoretical and empirical framework to model and apply economics of the family. Decision-making within the family has been neglected too long in transportation. Two special issues by Bhat and Pendyala, 2005 and by Timmermans and Junyi Zhang, 2009 provide the most notable exceptions. The o...

In most traffic congestion models agents are assumed to make trip-timing decisions independently and receive payoffs at the origin and destination that do not depend on whether other agents are present. We depart from this paradigm by considering a variant of Vickrey's bottle-neck model of the morning commute in which individuals live as couples an...

According to the Cost Recovery Theorem the revenues from optimal congestion tolls pay for the capacity costs of an optimal-sized facility if capacity is perfectly divisible, and if user costs and capacity costs have constant scale economies. This paper extends the theorem to long-run uncertainty about investment costs, user costs, and demand. It pr...

We consider the modeling of a bi-modal competitive network involving a public transport mode, which may be unreliable, and an alternative mode. Commuters select a transport mode and their arrival time at the station when they use public transport. The public transport reliability set by the public transport firm at the competitive equilibrium incre...

Number of pages: 46 pages with references

We envisage two types of spatially interacting agents evenly distributed over the real line. Initially, this represents a locally stable equilibrium. If we impose a gradual increase in the range and the volume of spatial interactions, the equilibrium may eventually exhibit local instability causing initial growth on a regularly-spaced pattern of lo...

Se presenta un análisis crítico sobre las metodologías y enfoques de modelación utilizados actualmente en la ciencia de los transportes. Se señalan inconsistencias que surgen de la confrontación entre la práctica, las herramientas de modelaje utilizadas y los desarrollos teóricos en varias disciplinas. Se plantean cuatro ejes de análisis: la modela...

This paper investigates the existence and uniqueness of equilibrium in the Vickrey bottleneck model when each user controls a positive fraction of total traffic. Users simultaneously choose departure schedules for their vehicle fleets. Each user internalizes the congestion cost that each of its vehicles imposes on other vehicles in its fleet. We es...

This paper provides a critical analysis about the currently methodologies and modeling approaches used in transportation science. The inconsistency between practice, modeling techniques and recent theoretical development in other disciplines, are pointed out in this contribution. Four key axes of analysis are proposed: modeling individual behavior...

We review the literature on household decision-making in economics as well as in transportation and urban economics. This literature starts with Gary Becker in Economics, 30 years ago, and has recently been introduced to study specific questions related to mobility and space. We consider two examples: residential location and mode choice for dual e...