Optimal Policy and Network Effects for the Deployment of Zero Emission Vehicles

46 Pages Posted: 15 Jul 2018

See all articles by Guy Meunier

Guy Meunier

Ecole Polytechnique, Palaiseau

Jean Pierre Ponssard

Ecole Polytechnique, Paris - Laboratoire d'Econometrie

Date Written: April 2018

Abstract

We analyze the impact of indirect network effects in the deployment of zero emission vehicles in a static partial equilibrium model. In most theoretical analysis direct and indirect effects are conflated, and relatively few authors have explicitly considered indirect network effects. We also introduce the market power of vehicle producers and scale effects in the production function. The model exhibits a multiplicity of local social extrema and of market equilibria, suggesting a possibility of lock-in. The optimal set of subsidies is derived so that the Pareto dominating market equilibrium would coincide with the social optimum. This framework is applied to the case of the fuel cell electric (hydrogen) vehicles.

Keywords: E-mobility, Network Effects, Joint Incentives for Infrastructure and Car Rebates

JEL Classification: C610

Suggested Citation

Meunier, Guy and Ponssard, Jean Pierre, Optimal Policy and Network Effects for the Deployment of Zero Emission Vehicles (April 2018). CESifo Working Paper Series No. 7026, Available at SSRN: https://ssrn.com/abstract=3202077

Guy Meunier (Contact Author)

Ecole Polytechnique, Palaiseau ( email )

Route de Saclay
Palaiseau, 91128
France

Jean Pierre Ponssard

Ecole Polytechnique, Paris - Laboratoire d'Econometrie ( email )

1 rue Descartes
Paris, 75005
France

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