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

Katalin Springels web page

Abstract: 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 2.16 times more electric vehicle purchases than the same amount spent on consumer price subsidies. However, this relation inverts with increased spending, as station subsidies’ impact tapers off faster