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Technology adoption and pro-social preferences

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  • Raphaël Soubeyran

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

In this paper, I study the design of least cost technology adoption subsidy schemes when the individuals' decisions are affected by peer effects and pro-social motivations. I show that pro-social preferences lead to lower individual subsidies whether peer effects are positive or negative. However, the form of the optimal scheme strongly depends on the type of peer effects. When peer effects are positive pro-social preferences lead to an increase in objective inequality -the difference between individual material payoffs- while they lead to a decrease in subjective inequality -the difference between individual utility levels. When peer effects are negative, the optimal subsidy scheme is uniform, that is all the individuals receive the same subsidy. The model delivers insights for the design of a large range of intervention programs supporting the adoption of new technologies, both in contexts where peer effects are positive (as has been shown in the case of malaria prevention technologies and modern agricultural inputs) and in contexts where peer effects are negative (as has been shown in the case of deworming pills).

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  • Raphaël Soubeyran, 2019. "Technology adoption and pro-social preferences," Working Papers halshs-02291905, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02291905
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02291905v3
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    Keywords

    pro-social preferences; incentives; inequality; externality; principal; Agents;
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