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Fixed Costs, Spillovers, and Adoption of Electric Connections

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Listed:
  • Barron, Manuel
  • Torero, Maximo

Abstract

We exploit exogenous variation in the price of connection fees to study the process of adoption of for formal connection to the electric grid in northern El Salvador. This variation, generated by randomly allocating discount vouchers among households, also generated exogenous variation in the share of neighbors receiving a discount ("voucher intensity"). We find that discount vouchers accelerated demand for formal connections, especially among households with an informal connection at baseline. We provide evidence that voucher intensity did not crowd out formal connections by facilitating informal access to the grid. Finally, we show that the electric utility could increase its customer base, revenue flows and profits by sharing part of the connection fee in the early years of an electrification project.

Suggested Citation

  • Barron, Manuel & Torero, Maximo, 2015. "Fixed Costs, Spillovers, and Adoption of Electric Connections," MPRA Paper 63804, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:63804
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    File URL: https://mpra.ub.uni-muenchen.de/63804/1/MPRA_paper_63804.pdf
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    References listed on IDEAS

    as
    1. Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-2390, October.
    2. Timothy G. Conley & Christopher R. Udry, 2010. "Learning about a New Technology: Pineapple in Ghana," American Economic Review, American Economic Association, vol. 100(1), pages 35-69, March.
    3. repec:eee:jeeman:v:86:y:2017:i:c:p:81-92 is not listed on IDEAS
    4. Oriana Bandiera & Imran Rasul, 2006. "Social Networks and Technology Adoption in Northern Mozambique," Economic Journal, Royal Economic Society, vol. 116(514), pages 869-902, October.
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    6. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    7. Pascaline Dupas, 2014. "Short‐Run Subsidies and Long‐Run Adoption of New Health Products: Evidence From a Field Experiment," Econometrica, Econometric Society, vol. 82(1), pages 197-228, January.
    8. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
    9. Barron, Manuel & Torero, Maximo, 2017. "Household electrification and indoor air pollution," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 81-92.
    10. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, January.
    11. Arthur G. Woolf, 1987. "The Residential Adoption of Electricity in Early Twentieth-Century America," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 19-30.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Rural Electrification Spillovers Fixed Costs Adoption;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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