Economic Analysis of Vehicle-Infrastructure Cooperative Approach for Enabling Automated Driving

Abstract

The current approach to driving automation has been primarily vehicle-centric. However, a
vehicle-infrastructure cooperative approach, in which infrastructure and vehicles cooperate to
perform the different driving tasks, may prevail in enabling automated driving. This paper
conducts an economic analysis of vehicle infrastructure cooperation for automated driving. In
doing so, we present a model that captures investment decisions in vehicle automation and infrastructure digitalization and their effect on travellers’ purchase and travel decisions. Our analysis
shows that, under certain conditions, equipping both infrastructure and vehicles is socially
optimal. However, by analyzing strategic interactions between infrastructure support service
providers and automakers, we show that lack of coordination between these two actors results in
suboptimal investment in vehicle automation and infrastructure digitalization. Especially, when
these two technologies are complementary, service providers are reluctant to invest in digital
infrastructure and vehicle manufacturers tend to over equip their vehicles so as to avoid relying
on infrastructure technology. Thus, we conclude by showing that better coordination between
automakers and service providers–under the form of profit sharing–is welfare-improving and
could potentially yield the socially optimal levels of automation and digitalization.

Keywords: automated driving, automated vehicles, vehicle-infrastructure cooperation, infrastructure, digitalization