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Identifying Challenges for Sustained Adoption of Alternative Fuel Vehicles and Infrastructure

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  • Struben, Jeroen J.R.,
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    Abstract

    This paper develops a dynamic, behavioral model with an explicit spatial structure to explore the co-evolutionary dynamics between infrastructure supply and vehicle demand. Vehicles and fueling infrastructure are complementarities and their chicken-egg dynamics are fundamental to the emergence of a self-sustaining alternative fuel vehicle market, but they are not well understood. The paper explores in-depth the dynamics resulting from local demand-supply interactions with strategically locating fuel-station entrants. The dynamics of vehicle and fuel infrastructure are examined under heterogeneous socio-economic/demographic conditions. The research reveals the formation of urban adoption clusters as an important mechanism for early market formation. However, while locally speeding diffusion, these same micro-mechanisms can obstruct the emergence of a large, self-sustaining market. Other feedbacks that significantly influence dynamics, such as endogenous topping-off behavior, are discussed. This model can be applied to develop targeted entrance strategies for alternative fuels in transportation. The roles of other powerful positive feedbacks arising from scale and scope economies, R&D, learning by doing, driver experience, and word of mouth are discussed.

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    File URL: http://hdl.handle.net/1721.1/37306
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    Bibliographic Info

    Paper provided by Massachusetts Institute of Technology (MIT), Sloan School of Management in its series Working papers with number 37306.

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    Date of creation: 27 Apr 2007
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    Handle: RePEc:mit:sloanp:37306

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    Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
    Phone: 617-253-2659
    Web page: http://mitsloan.mit.edu/
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    Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA

    Related research

    Keywords: diffusion; transitions; co-evolution; industry dynamics; transportation; fueling infrastructure; alternative fuels; complementarities; spatial models; system dynamics;

    This paper has been announced in the following NEP Reports:

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    1. repec:reg:wpaper:179 is not listed on IDEAS
    2. Levinsohn, James & Berry, Steven & Pakes, Ariel, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Scholarly Articles 3436404, Harvard University Department of Economics.
    3. Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999. "Urban transportation," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999 Elsevier.
    4. Brownstone, David & Bunch, David S. & Train, Kenneth, 2000. "Joint mixed logit models of stated and revealed preferences for alternative-fuel vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 34(5), pages 315-338, June.
    5. Flynn, Peter C., 2002. "Commercializing an alternate vehicle fuel: lessons learned from natural gas for vehicles," Energy Policy, Elsevier, vol. 30(7), pages 613-619, June.
    6. Kenneth E. Train & Clifford Winston, 2007. "Vehicle Choice Behavior And The Declining Market Share Of U.S. Automakers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1469-1496, November.
    7. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07.
    8. Brownstone, David & Small, Kenneth A., 2003. "Valuing Time and Reliability: Assessing the Evidence from Road Pricing Demonstrations," University of California Transportation Center, Working Papers qt95z0p35k, University of California Transportation Center.
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