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One‐Off Subsidies and Long‐Run Adoption—Experimental Evidence on Improved Cooking Stoves in Senegal

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  • Gunther Bensch
  • Jörg Peters

Abstract

Free technology distribution can be an effective development policy instrument if market‐driven adoption is socially inefficient and hampered by affordability constraints. Yet, policy makers often oppose free distribution, arguing that reference dependence lowers the willingness to pay (WTP) and thus hinders market potentials in the long run. For improved cookstoves, this paper studies the WTP six years after a randomized one‐time free distribution in 2009. We demonstrate that the cookstoves were intensely used by the treatment group households in the years after randomization until they reached their designated lifetime. Using a real‐purchase offer, we find that both treatment and control households reveal a remarkably high WTP in 2015. The estimated confidence interval suggests that we can exclude a substantial negative effect on the treatment group. The policy implication is that one‐time free distribution does not necessarily undermine future market establishment, and thus can be an effective policy instrument if rapid dissemination is the objective.

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  • Gunther Bensch & Jörg Peters, 2020. "One‐Off Subsidies and Long‐Run Adoption—Experimental Evidence on Improved Cooking Stoves in Senegal," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 72-90, January.
    • Handle: RePEc:wly:ajagec:v:102:y:2020:i:1:p:72-90
    DOI: 10.1093/ajae/aaz023
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    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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