I’d Like to Move It! The Effect of Consumption Rivalry on Demand Estimation: Evidence from the EV Public Charging Market
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Description: Rivalry in consumption generates variation in the choice sets decision-makers face. Neglecting such variation generates biased demand estimates. Whereas previous research used information from periodic inventory systems to correct this bias, this study instead uses novel data from a real-time inventory system that records all public charging sessions by electric vehicles in a residential area of Amsterdam. For each transaction I can reconstruct a user's exact set of available alternatives at the time of arrival which allows me to impose deterministic choice set constraints. I show that this significantly improves demand forecasts for local charging facilities, with estimated differences between observed and latent demand reaching up to 40 percentage points at some locations. For the current demand and infrastructure, consumption rivalry however remains a local phenomenon limited to peak hours. A policy analysis suggests that it is not cost effective to install more capacity just to mitigate consumption rivalry. Instead, it may be better to implement policies aimed at increasing the utilization of existing capacity.