Penetration level and impact of ITS applications: economic analysis of ITS deployment plans and the role of governments

The impact of Intelligent Transportation System (ITS) applications, especially cooperative driver assistance systems, depends greatly on the percentage of users equipped (i.e. the penetration rate). The application may have little impact if only a few drivers are using the application. A higher penetration level is therefore necessary if maximum impact is desired. This paper argues that government should subsidise ITS developers so that the retail price of ITS applications can be lowered. By doing so more drivers will buy and use the application and a higher impact can be achieved. The improvement in impact, evaluated monetarily, can outweigh the subsidies, whereby a win-win situation arises.