Analysis of local electric vehicle incentives in the Norwegian car market : a multi-homing approach
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- Master Thesis 
This paper analyse how the local incentives for electric vehicles affect the number of people that purchase both conventional and electric vehicles. After the threshold of 50 000 electric vehicles was reached in April 2015, there has been an ongoing debate regarding whether the incentives for electric vehicles should be withheld. The intent of the incentives is to develop a more climate friendly vehicle fleet. Although the incentives impact on joint purchase is important to understand how efficient the incentives are in achieving the policy objective, we are not aware of any research on this area up to this point. Our contribution is a theoretical model that allow consumers to purchase multiple differentiated product varieties, a behavior defined as multi-homing. The model predicts that multi-homing softens the competition between electric and conventional vehicles and partially absorbs the demand shifting effect of the incentives. Furthermore, we conduct empirical research on the car market to analyse how the car market historically has reacted to the incentives. Our findings coincide with the model's predictions at a satisfactory level. We find that all incentives increase the number of multi-homers. While our estimations shows that free ferry admission leads to an increased vehicle fleet, the introduction of toll stations, congestion charge and road toll lead to a reduction in the overall vehicle stock. The empirical results reveal that the incentives only seem to phase out sales of conventional cars if they are derivatives of policy instruments with a negative effect on the demand for conventional vehicles.