One-Off Subsidies and Long-Run Adoption – Experimental Evidence on Improved Cooking Stoves in Senegal

ZEF-Discussion Papers on Development Policy No. 235

36 Pages Posted: 19 Apr 2017

See all articles by Gunther Bensch

Gunther Bensch

RWI Leibniz Institute for Economic Research

Jörg Peters

RWI - Leibniz Institute for Economic Research; University of Passau - Business Administration and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2017

Abstract

Free distribution of a technology can be an effective development policy instrument if its adoption is socially inefficient and hampered by affordability constraints. Improved cookstoves may be such a case: they generate high environmental and public health returns, but adoption is generally low. Based on a randomized controlled trial in rural Senegal, this paper studies whether one-time free cookstove distribution affects households’ willingness to pay (WTP) in the long run. Effects might be negative because people anchor their WTP on the earlier zero price (reference dependence) or positive because information deficits about potential benefits are overcome. We find that households who received a free stove six years back exhibit a higher WTP today compared to control households. Potential reference dependence effects are thus at least compensated by learning effects. Our findings suggest that one-time free distribution does not spoil future prices and might even be a stepping stone for future market establishment.

Keywords: technology adoption, cookstoves, willingness to pay, real-purchase offer, energy access

JEL Classification: D03, D12, O12, O13, Q41

Suggested Citation

Bensch, Gunther and Peters, Jörg, One-Off Subsidies and Long-Run Adoption – Experimental Evidence on Improved Cooking Stoves in Senegal (April 2017). ZEF-Discussion Papers on Development Policy No. 235, Available at SSRN: https://ssrn.com/abstract=2955117 or http://dx.doi.org/10.2139/ssrn.2955117

Gunther Bensch (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Jörg Peters

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany
0049-201-8149-247 (Phone)

HOME PAGE: http://www.rwi-essen.de

University of Passau - Business Administration and Economics ( email )

Wirtschaftswissenschaftliche Fakultaet
Passau, D-94030
Germany

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