Journal
JOURNAL OF THE ASSOCIATION OF ENVIRONMENTAL AND RESOURCE ECONOMISTS
Volume 4, Issue 1, Pages 89-133Publisher
UNIV CHICAGO PRESS
DOI: 10.1086/689702
Keywords
Electric vehicles; Indirect network effects; Policy design
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Funding
- National Science Foundation [CNS-1248079]
- Direct For Computer & Info Scie & Enginr
- Division of Computing and Communication Foundations [1248079] Funding Source: National Science Foundation
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The market for plug-in electric vehicles (EVs) exhibits indirect network effects due to the interdependence between EV adoption and charging station investment. Through a stylized model, we demonstrate that indirect network effects on both sides of the market lead to feedback loops that could alter the diffusion process of the new technology. Based on quarterly EV sales and charging station deployment in 353 metro areas from 2011 to 2013, our empirical analysis finds indirect network effects on both sides of the market, with those on the EV demand side being stronger. The federal income tax credit of up to $7,500 for EV buyers contributed to about 40% of EV sales during 2011-13, with feedback loops explaining 40% of that increase. A policy of equal-sized spending but subsidizing charging station deployment could have been more than twice as effective in promoting EV adoption.
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