Economic Analysis of Vehicle-Infrastructure Cooperative Approach for Enabling Automated Driving

20 Pages Posted: 1 May 2021 Last revised: 3 Nov 2021

See all articles by Daniel Vignon

Daniel Vignon

University of Michigan at Ann Arbor

Yafeng Yin

University of Michigan, Ann Arbor

Sina Bahrami

Eindhoven University of Technology

Ken Laberteaux

Toyota Research Institute

Date Written: April 24, 2021

Abstract

The current approach to driving automation has been primarily vehicle-centric. However, a vehicle-infrastructure cooperative approach, in which infrastructure and vehicles cooperate to perform the different driving tasks, may prevail in enabling automated driving. This paper conducts an economic analysis of vehicle infrastructure cooperation for automated driving. In doing so, we present a model that captures investment decisions in vehicle automation and infrastructure digitalization and their effect on travellers’ purchase and travel decisions. Our analysis shows that, under certain conditions, equipping both infrastructure and vehicles is socially optimal. However, by analyzing strategic interactions between infrastructure support service providers and automakers, we show that lack of coordination between these two actors results in suboptimal investment in vehicle automation and infrastructure digitalization. Especially, when these two technologies are complementary, service providers are reluctant to invest in digital infrastructure and vehicle manufacturers tend to over equip their vehicles so as to avoid relying on infrastructure technology. Thus, we conclude by showing that better coordination between automakers and service providers–under the form of profit sharing–is welfare improving and could potentially yield the socially optimal levels of automation and digitalization.

Keywords: automated driving, automated vehicles, vehicle-infrastructure cooperation, infrastructure, digitalization

Suggested Citation

Vignon, Daniel and Yin, Yafeng and Bahrami, Sina and Laberteaux, Ken, Economic Analysis of Vehicle-Infrastructure Cooperative Approach for Enabling Automated Driving (April 24, 2021). Available at SSRN: https://ssrn.com/abstract=3833485 or http://dx.doi.org/10.2139/ssrn.3833485

Daniel Vignon

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Yafeng Yin (Contact Author)

University of Michigan, Ann Arbor ( email )

2350
Hayward Street
Ann Arbor, MI 48109
United States

Sina Bahrami

Eindhoven University of Technology ( email )

Department of Built Environment
Eindhoven, 5612 AZ
Netherlands

Ken Laberteaux

Toyota Research Institute ( email )

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