Governmental expenditure implications of autonomous vehicles

Abstract

The developing expansion of autonomous vehicles and ride-sharing services, as well as a shift to electric vehicles, is expected to have substantial implications for the expenditures of state and local government budgets. I provide a framework for examining such implications and initial estimates of the possible magnitude of these expenditure-side effects. Such an examination is speculative and uncertain, both because the growth of autonomous transportation is unclear and because the expenditure effects depend on linkages between autonomous transportation and other market developments. The potential expenditure effects are categorized into three groups — immediate demand effects, production of public services, and longer-run indirect effects. The implications seem largest relatively for county governments, where they may impact nearly two-thirds of spending.