Policy makers consider electric vehicles (EVs) an important policy lever to reduce urban air pollution, lower carbon emissions, and reduce overall petroleum consumption. The need to understand purchase patterns for EVs is especially important in light of the bold policy targets set for increasing EV penetration or phasing out internal combustion engines (ICEs) entirely in countries around the world and in California.

This policy brief summarizes findings from the project which analyzed data on every EV, including plug-in hybrid (PHEV) and battery electric vehicle (BEV), purchased in California from 2011 to 2015 and random samples of comparable conventional and hybrid vehicles. It examined the proliferation of EVs during a period in which the market has matured to include new technologies, a growing secondary market has evolved, and a suite of policies has been put in place to promote switching away from gasoline-powered cars. Researchers analyzed the data to answer two questions. First, is the conventional wisdom, which suggests that EV adoption is more common among high-income households and less common among minority groups, reflected in purchase data? Second, do two plausible barriers impede low-income and minority car buyers’ adoption of EVs: price discrimination against groups traditionally unlikely to purchase EVs and availability of EVs at dealerships near low-income or minority communities.

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This research project explores the plug-in electric vehicle (PEV) market, including both Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs), and the sociodemographic characteristics of purchasing households. The authors use detailed micro-level data on PEV purchase records to answer two primary research questions. Their results confirm that low-income households exhibit a lower share of PEV purchases than they do for conventional, internal combustion engine (ICE) vehicles. Households with annual income less than $50,000 comprise 33 percent of ICE purchases and only 14 percent of PEVS. By comparison, high-income households earning more than $150,000 annually comprise only 12 percent of ICE purchases and 35 percent of PEV purchases over their sample period. Similarly, unsurprising patterns can be seen across ethnicities. For example, non-Hispanic Whites represent 41 percent of ICE purchases but 55 percent of PEV purchases, as compared to Hispanics (38 percent of ICE and 10 percent of PEVs) and African Americans (3 percent of ICEs and 2 percent of PEVS). These differences naturally raise questions about barriers to PEV adoption among low-income and minority ethnic populations. By comparing outcomes in the ICE, hybrid, and PEV markets across income and ethnic groups, the authors are able to test whether price discrimination and barriers to market access are higher in PEV markets for low-income and minority ethnic groups. The authors find that, overall, they are not, although there are mixed results for the used PEV market. In general, non-white, low-income populations face higher prices in the used PEV market, relative to a baseline, than they do in the new PEV market. While some people travel farther to buy used PEVs than they do to buy used ICE vehicles, there is not a pattern that would indicate systematic discrimination (e.g. Hispanics travel farther to buy used PHEVs but less far to buy used BEVs). While the authors admit that their empirical approach cannot control for all potential vehicle composition effects, the authors view their results as being most consistent with a market that provides access to all ethnicities and income groups.

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This dissertation analyzes the role of regulation and competition in a variety of markets.

In the first chapter, I examine how regulation and market structure can lead to market unraveling when firms face rapidly increasing risk due to climate change. I first present a simple model of an adversely selected disaster insurance market to investigate how price regulation and increasing climate costs impact private markets in the presence of an insurer of last resort. I then empirically study the California non-renewal moratoriums, a first-of-its-kind regulation aimed at stymieing the retreat of insurance companies from high wildfire risk areas by forcing insurers to supply insurance to current customers following disasters in 2019 and 2020. Using quasi-random geographic variation in regulatory borders and a difference-in-differences identification strategy, I find that the moratoriums successfully reduced company-initiated non-renewals in the short run. However, the effects only lasted for one year, with insurers resuming non renewals as soon as the moratorium lapsed. Additionally, the moratoriums had no discernible effect on participation in the State's insurer of last resort.

In the second chapter, I estimate the effect of nearby entry and exit on the pricing of incumbent firms using high frequency price data and the precise geographic location of all gas stations in California. Using a difference-in-differences design, I find that entry of a new station is associated with a two-cent decrease in prices at incumbent stores, which equates to a 5\% decrease in estimated retail markups. The effects are immediate, persistent, and show no sign of deterrence or limit pricing behavior. However, nearby exit results in precisely estimated null effects on prices. Both results are robust to various specifications and market size definitions. This paper also contributes to the conversation on California's ``Mystery Gas Surcharge", a divergence between California and nationwide gas prices after the February 2015 Torrance refinery fire that cannot be explained by differences in taxes, regulation, or input and spot prices \citep{Borenstein2023}. I show that the magnitude of entry effects was unchanged, providing evidence that retail competition was largely unaffected.

In the third chapter, I study the link between auto insurance and health insurance market. specifically, I study how the increase in health insurance status from the implementation of the Affordable Care Act (ACA) overlapped with automobile insurance. Using data on automobile insurance claims from the National Association of Insurance Commissioners, I identify a plausibly causal impact of the ACA on the frequency of automobile insurance claims. These increases are restricted to the private market portion of the ACA and are associated with a 4.7\% increase in bodily injury liability claim frequency.

California is one of the first markets in the world to have a significant secondary market for plug-in electric vehicles (PEVs), which includes both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). This study examines the status of the nascent secondary PEV market in California. The authors examine who purchases these vehicles and how used PEVs are utilized. They examine the role of PEV purchase incentives both via surveys of used PEV buyers and through econometric analysis of detailed micro data. Results suggests that California PEV buyers have significantly higher incomes than the average household. If California seeks to broaden the used PEV market, lower income buyers must be brought into the market. On this count, the used PEV market appears to be beneficial, attracting buyers with slightly lower incomes than in the new PEV market. Results also indicate that used PHEV owners (and, more precisely, short-range used PEV owners) are charging their vehicles less than they could. In addition, results show that early used PEV buyers have significant knowledge gaps, such as being unaware of new PEV purchase incentives, which reduce their ability to compare price options. Overall, the early used PEV buyers were satisfied with the PEV technology and would redo their purchase or buy another PEV. This bodes well for the future of the PEV market. High occupancy vehicle stickers were a powerful motivator for a subset of PHEV used buyers, perhaps due to the lack of new stickers being available at the time of and preceding the survey. Our econometric analysis shows that the presence of new BEV purchase subsidies correlates with a small net outflow of used PEVs to states that do not offer new BEV subsidies. If this modest exit of PEVs grows overtime, it could make it more difficult to achieve state level environmental goals, such as local pollution abatement or state-level GHG reduction targets. Our analysis finds that PEV sales to minority groups show no clear signs of market access discrimination in the new or used PEV markets. Finally, our findings show that PHEV and BEV markets and consumers operate differently from each other, suggesting the need to be careful about treating them identically in analysis and policy-formation.

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