Policy Efforts to Promote the Adoption of Autonomous Vehicles: Subsidy and AV Lanes

Autonomous vehicles (AVs) have the potential to improve safety, traffic capacity, and energy efficiency, but these advantages can only be realized when the AV market penetration is sufficiently high. To promote the adoption of AVs, it would be crucial for the government to take policy measures. This paper develops a two-stage model to explore the effects of subsidy and AV lanes' policies on AV adoption. In the first stage, given the subsidy policy, the vehicle manufacturer sets AV price to pursue maximum profit while anticipating the choice of consumers for AVs or conventional vehicles (CVs), from which the AV market penetration can be accessed. Subsequently, based on the AV market penetration acquired from the first stage model, an optimization model integrating the mixed traffic assignment is developed in the second stage to determine the time-dependent progressive AV lanes' deployment plan. The first and second stage models are solved using the simulation-optimization and genetic-algorithm-based approaches, respectively. Due to the mutual influence of the two models, an iterative optimization approach is applied to solve the whole model. Two numerical experiments are conducted, and the results demonstrate the positive effects of subsidy and AV lane policies on increasing AV market penetration. The analysis provides significant managerial insights for policymakers to promote the development of AVs.