Effective public resource allocation to escape lock-in: the case of infrastructure-dependent vehicle technologies

Abstract

A multi-stage technological substitution model of infrastructure-dependent vehicle technologies is developed. This is used to examine how the allocation of public, financial resources to RD&D support and infrastructure development affects the replacement of a locked-in vehicle technology by more sustainable ones. Although consumers eventually determine which vehicle technology will be successful, intervention and financial support by public agencies can affect the technological substitution process. Computer simulations provide insights into the trade-off between investing in RD&D, i.e. the creation of new technological options (variety), and investing in infrastructure development for these technologies. The paper ends with policy recommendations.