Autonomous Vehicles, Urban Deployment, and Welfare Effects

ABSTRACT This paper provides a theoretical analysis of the effects of autonomous vehicles (AVs) on the spatial structures of future cities. We consider two types of AVs, private AVs (PAVs) and shared AVs (SAVs). We assume that AVs have a lower marginal travel time cost than human‐driven traditional vehicles (TVs) due to additional utility caused by free activities in AVs, and PAVs have a lower marginal travel time cost than SAVs due to better privacy, convenience, and comfort. Two urban spatial models are presented and compared: one focusing on a city with only TVs and the other on a city with mixed PAVs and SAVs. Both models account for land competition among firm production, household residence, and parking. The optimal residential lot size and the optimal SAV market share are determined, with an objective of maximizing social welfare. The findings show that introducing AVs may lead the city size to expand or shrink, and both the social welfare and the total congestion cost to increase or decrease, depending on the maturity degree of AV technology and the SAV market share.