Working Paper: NBER ID: w29842
Authors: James B. Bushnell; Erich Muehlegger; David S. Rapson
Abstract: This paper presents evidence that gasoline prices have a larger effect on demand for electric vehicles (EVs) than electricity prices in California. We match a spatially-disaggregated panel dataset of monthly EV registration records to detailed records of gasoline and electricity prices in California from 2014-2017, and use these to estimate the effect of energy prices on EV demand. Two distinct empirical approaches (panel fixed-effects and a utility-border discontinuity) yield remarkably similar results: a given change in gasoline prices has roughly four to six times the effect on EV demand as a similar percentage change in electricity prices. We explore the implications for optimal EV subsidies, which promote externality reduction benefits and correct for consumer misoptimization stemming from the undervaluation of future electricity costs.
Keywords: No keywords provided
JEL Codes: H23; Q49; Q55; R4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| EV demand (O00) | optimal EV subsidies (H23) |
| gasoline prices (L90) | optimal EV subsidies (H23) |
| gasoline prices (L90) | EV demand (O00) |
| electricity prices (L97) | EV demand (O00) |