Program > Papers by author > Reidt Noe

Transport policies in a two-sided market
Chiara Colesanti Senni  1@  , Noe Reidt  1@  
1 : ETH Zurich

We use a two-sided market to analyze a potential route of decarbonizing the transport sector, which relies on the adoption of electric vehicles (EVs). In our model EVs and gasoline vehicles (GVs) are demanded on one side of the market whereas demand for investment in electric vehicles charging stations (EVCSs) represents the other side. We assume that consumers can either buy EVs or GVs, which are substitutes, and their relative demand is affected by the availability of EVCSs. On the other side of the market, investors decide how many EVCSs to buy, depending on the number of EVs. A monopolistic platform producing both types of vehicles and EVCSs intermediates between the two sides of the market. The model allows us to capture the network effect operating between the number of EVCSs and the one of EVs; we assume this effect to be of a different intensity on each side. We first analyze a static setup of the model and we study the impact of one-sided and of two-sided policies. We find that the results depend on the relative values of the network effects on the two sides, but also on the degree of sostitutability between EVs and GVs and the slopes of the inverse demand functions. Then, we move to a dynamic setup of the model where we assume that demand is unknown as the markets for EVCSs and EVs are relatively new and also the impact that they will have on the traditional market for dirty cars is unclear. In this context, the monopolist uses a rule of the thumb (the gradient rule) to set prices and quantities that maximize profits.

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