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Do retail businesses have efficient incentives to invest in public charging stations for electric vehicles?

Author

Listed:
  • Marie-Louise Arlt

    (LMU - Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München)

  • Nicolas Astier

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

Many public charging stations for electric vehicles in the United States are 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 note that observed pricing schedules for charging stations significantly depart from both first-best and monopoly pricing. We argue that a possible explanation is that many hosting facilities may install a charging station 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.

Suggested Citation

  • Marie-Louise Arlt & Nicolas Astier, 2023. "Do retail businesses have efficient incentives to invest in public charging stations for electric vehicles?," PSE-Ecole d'économie de Paris (Postprint) halshs-04330805, HAL.
    • Handle: RePEc:hal:pseptp:halshs-04330805
    DOI: 10.1016/j.eneco.2023.106777
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Electric vehicles; Charging network; Pricing; Investment incentives;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R49 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Other

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