Do Retail Businesses Have Efficient Incentives to Invest in Public Charging Stations for Electric Vehicles?

36 Pages Posted: 2 Dec 2022

See all articles by Marie-Louise Arlt

Marie-Louise Arlt

Ludwig Maximilians University Munich

Nicolas Astier

Paris School of Economics (PSE); Université Paris Est - Ecole des Ponts ParisTech

Abstract

Many public charging stations for electric vehicles in the United States are slow chargers installed at the premises of pre-existing businesses such as grocery stores or restaurants. This paper investigates the incentives of these retail businesses to install and operate charging stations.First, we observe that existing pricing schedules for slow charging stations in the U.S. significantly depart from both first-best and monopoly pricing. We argue that this may be interpreted as evidence that many hosting facilities install charging stations primarily as a strategy to attract more customers to their core business.Second, we use an imperfect competition model to study retail businesses’ incentives to invest in charging stations.We show that hosting facilities may be trapped in a prisoner’s dilemma where investing in a charging station decreases their profit in the long run. However, the equilibrium level of investments in public charging stations need not differ from the socially optimal outcome.

Keywords: electric vehicles, charging network, pricing, investment incentives

Suggested Citation

Arlt, Marie-Louise and Astier, Nicolas, Do Retail Businesses Have Efficient Incentives to Invest in Public Charging Stations for Electric Vehicles?. Available at SSRN: https://ssrn.com/abstract=4291679 or http://dx.doi.org/10.2139/ssrn.4291679

Marie-Louise Arlt (Contact Author)

Ludwig Maximilians University Munich ( email )

Nicolas Astier

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Université Paris Est - Ecole des Ponts ParisTech ( email )

France

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