Accelerating the adoption of automated vehicles by subsidies: A dynamic games approach

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Accelerating the adoption of automated vehicles by subsidies: A dynamic games approach

Luo, Qi / Saigal, Romesh / Chen, Zhibin / Yin, Yafeng

Highlights • Accelerate the early deployment of AV by subsidy for long-term benefits. • A dynamic games approach to design AV subsidy with asymmetric information. • Subsidy policies are adaptive to the market penetration process. • A unique two-threshold, non-monotonic structure in AV subsidy policy. • Subsidizer yields a higher cumulative payoff comparing to welfare maximization.

Abstract Early deployment of automated vehicles (AVs) may likely cause a loss of efficiency in the transportation system. However, after there are a sufficient number of such vehicles in the traffic stream, many benefits can be realized. It thus appears sensible to provide subsidies to promote the early adoption of AVs and shorten the transition period. This paper investigates an optimal subsidy policy that accelerates the deployment of AVs from lower to higher market penetration rates. The policy can maximize the government agency’s expected total payoff associated with the AV deployment. The main contribution is a dynamic games approach that considers the uncertainty in the market forecast and the information asymmetry between the government agency and the subsidized entities.