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Travel mode choices in a greening market: the impact of electric vehicles and prior investments

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  • Jeremy van Dijk
  • Mehdi Farsi
  • Sylvain Weber

Abstract

Through a choice experiment conducted among 995 Swiss respondents, we study the linkages between prior investment decisions and the choice of travel mode. Our experiment design and empirical framework aims to identify the impact of electric vehicles (EVs) and to test for two behavioural deviations from the rationally optimal usage. Prior investment in a car or public transport pass could be used ex-ante as a commitment device for overcoming self-control issues, or could affect mode choices ex-post through regret effects of sunk costs. We find no evidence to support the sunk cost hypothesis, but our findings provide partial evidence in favour of commitment mechanisms. A prior investment decision decreases the consumer’s responsiveness to variation of travel time. However, such commitments do not seem to influence responses to changes in marginal travel cost. Further, we find that EV adoption does not result in a significant step-change in usage patterns above rational marginal cost reactions. Our results thus reinforce the importance of financial incentives in policies aiming at a behavioural change in travel mode choices.

Suggested Citation

  • Jeremy van Dijk & Mehdi Farsi & Sylvain Weber, 2020. "Travel mode choices in a greening market: the impact of electric vehicles and prior investments," IRENE Working Papers 20-04, IRENE Institute of Economic Research.
    • Handle: RePEc:irn:wpaper:20-04
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    More about this item

    Keywords

    Transport; Behaviour; Choice experiment; Commitment; Sunk cost; Electric vehicles; Environmental policy.;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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