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With great power (prices) comes great tail pipe emissions? \\ A natural experiment of electricity prices and electric car adoption

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  • Johannes Mauritzen

Abstract

A fundemantal and unanswered question for the widely shared goal of electrifying passenger vehicles is how the price of electricity, which can vary greatly across countries and regions, affects buying behavior. I make use of a natural experiment in Norway in the period 2021-2022 when large price differences between north and south emerged to estimate the effect of electricity prices on the decision to purchase a pure battery-electric vehicle. Simple difference estimates along the border of the price zones as well as a difference-in-difference regression model suggest a significant but economically modest effect of a 2-4\% reduction in the probability of purchasing an electric vehicle in the high price zone. A counterfactual simulation suggests that there would have been about 3000 to 6000 fewer electric vehicles sold in the high-price south compared to a scenario where the south had equally low prices as in the north.

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  • Johannes Mauritzen, 2023. "With great power (prices) comes great tail pipe emissions? \\ A natural experiment of electricity prices and electric car adoption," Papers 2304.01709, arXiv.org.
    • Handle: RePEc:arx:papers:2304.01709
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    2. Johanna Fink, 2023. "Can the creation of separate bidding zones within countries create imbalances in PV uptake? Evidence from Sweden," Papers 2312.16161, arXiv.org.

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