Optimal switch from a fossil-fueled to an electric vehicle
| Autor: | Giorgio Ferrari, Paolo Falbo, Maren Diane Schmeck, Giorgio Rizzini |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
Opportunity cost
Dependency (UML) business.product_category General Economics (econ.GN) Operations research incentives Computer science media_common.quotation_subject Switching time FOS: Economics and business 60G40 91B76 91G50 49L20 electric vehicle adoption Electric vehicle Incentives ddc:330 Real options Optimal stopping pollution Function (engineering) media_common Economics - General Economics Q51 Q52 Electric vehicle adoption real options Process (computing) Q58 Stochastic opportunity cost C61 Incentive stochastic opportunity cost optimal stopping business General Economics Econometrics and Finance Finance Public finance |
| DOI: | 10.1007/s10203-021-00359-2 |
| Popis: | In this paper we propose and solve a real options model for the optimal adoption of an electric vehicle. A policymaker promotes the abeyance of a fossil-fueled vehicles through an incentive, and the representative fossil-fueled vehicle's owner decides the time at which buying an electric vehicle, while minimizing a certain expected cost. This involves a combination of various types of costs: the stochastic opportunity cost of driving one distance with a traditional fossil-fueled vehicle instead of an electric one, the cost associated to traffic bans, and the net purchase cost. After determining the optimal switching time and the minimal cost function for a general diffusive opportunity cost, we specialize to the case of a mean-reverting process. In such a setting, we provide a model calibration on real data from Italy, and we study the dependency of the optimal switching time with repect to the model's parameters. Moreover, we study the effect of traffic bans and incentive on the epected optimal switching time. We observe that incentive and traffic bans on fossil-fueled transport can be used as effective tools in the hand of the policymaker to encourage the adoption of electric vehicles, and hence to reduce air pollution. MSC 2010 classification: 60G40, 91B76, 91G50, 49L20 |
| Databáze: | OpenAIRE |
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