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

The current approach to automated driving 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 travelers’ purchase and travel decisions. Our analysis shows that, because of the heterogeneity in road usage and in vehicles miles travelled by individual users, vehicle-infrastructure cooperation is socially optimal. However, by analyzing strategic interactions between road operators 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, road operators are reluctant to invest in upgrading their infrastructure and 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 road operators–under the form of profit sharing–is welfare improving and can yield the socially optimal levels of automation and digitalization.