Economic Constrains for the Utilisation of the Safety Potential of Future Vehicle-to-vehicle (C2C)communication Technologies



Economic Constrains for the Utilisation of the Safety Potential of Future Vehicle-to-vehicle (C2C)communication Technologies

Authors

A Matthes, University of Technology Dresden, DE

Description

This paper analyses the potential risks for market implementation of future vehicle-to-vehicle (C2C) safety technologies from a theoretical network economics point of view as from an empirical approach by analysing of over 17.000 real world crashes.

Abstract

Despite the great success in the last 30 years passive safety systems are reaching a limit in improving vehicle safety. Fundamental enhancement of passenger protection can only be achieved by including predictive vehicle-to-vehicle communication technologies in the future. This paper analyses the potential risks for market implementation and penetration of these new technologies from a theoretical network economics point of view. Additional empirical data analysis for already established car safety systems is done to generate further findings.
From an economic point of view the author of this paper assumes that vehicle-to-vehicle communication is generating positive externalities. Furthermore, production of the respective communication equipment is characterised by economies of scale in production. The overall question of this examination is to analyse whether the risk of market failure is that strong that public regulation is necessary.
The implementation process of vehicle-to-vehicle communication technologies shows many economic effects which are very well known in network economic literature. The most obvious one is the need to reach a critical mass of car owners which adopt the new technologies within a relatively short time. Otherwise, it is very difficult to generate the full benefit of the C2C communication systems. The full benefit means to increase the safety on the roads so significantly that consumers were willing to pay for C2C equipment and to adopt these new technologies. Because of this network effect it will be very difficult to reach an efficient market solution without public intervention. Some possible solutions could be subsidies at the beginning or a regional differentiated implementation.
Additionally there could emerge additional problems in the implementation process like possible lock-in effects in case of too early decision for one special standard or a suboptimal technology. In the future, it can become too expansive to change the suboptimal standard again.

In the empirical part of this paper the author uses information about the penetration process and the effectiveness of already established active car safety systems like ABS and ESC. Econometric analysis of real accident data is done with the aim to quantify the extent of positive external effects of new vehicle safety technologies. Therefore the author used the GIDAS (German In-Depth Accident Study) database which includes over 17.000 real world crash records. GIDAS project started 10 years ago and is the largest and already most established in-depth accident study in Germany. GIDAS has collected on-scene accident cases in the areas of Hannover and Dresden. Due to the on-scene investigation and afterwards evaluation of each accident this data base is very reliable and comprehensive. The author conducted several linear regressions and logit/probit estimations with the GIDAS data in order to quantify the positive externalities of already established and accepted safety systems.
This paper closes with four concrete policy recommendations for the implementation and penetration process for future vehicle-to-vehicle communication technologies.

Keywords: safety, vehicle-to-vehicle communication, C2C, economic evaluation, regulation

Publisher

Association for European Transport