Regulating coopetition in an EV charging market

Abstract

This paper explores the coopetitive relationship between a private firm and a utility when the utility simultaneously competes with the firm in the output (EV charging-station) market and potentially cooperates in the input (electricity) market through its choice of a mark-up rate on the price of electricity supplied to the firm’s charging stations. In the absence of regulation, we find the utility chooses to self-regulate itself (i.e., cooperate with the firm) in the input market in order to continue earning revenue from the sale of electricity to the firm’s charging stations. We uncover the condition under which the utility chooses not to decrease its mark-up rate in response to an increase in market demand for EV charging. We similarly uncover the condition under which a regulator chooses a lower mark-up rate than the utility. Numerical analysis illustrates these findings. • Theoretical framework explores coopetition in an EV charging market between a private firm and utility. • In absence of regulation, utility self-regulates the wholesale mark-up rate it charges for electricity. • Conditions are derived under which a regulator chooses to lower utility’s mark-up rate. • Numerical analysis illustrates these findings for different types of market demand.