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Network Externality and Subsidy Structure in Two-Sided Markets: Evidence from Electric Vehicle Incentives

Date and Time

Tuesday 12/04/2018 10:00AM to 11:30AM EST
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Room 1426, William Jefferson Clinton West Building
1301 Constitution Ave., NW
Washington, DC 20001


Contact: Carl Pasurka, 202-566-2275

Presenter:  Katalin Springel (McDonough School of Business, Georgetown University)

Description:  This paper uses new, large-scale vehicle registry data from Norway and a two-sided market framework to show non-neutrality of different subsidies and estimate their impact on electric vehicle adoption when network externalities are present. Estimates suggest a strong positive connection between electric vehicle purchases and both consumer price and charging station subsidies. The counterfactual analyses suggest that between 2010 and 2015 every dollar spent on station subsidies resulted in more than twice as many electric vehicle purchases as the same amount spent on consumer price subsidies. However, this relation inverts with increased spending, as station subsidies’ impact tapers off faster.