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

19 Pages Posted: 24 Mar 2020

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

Date Written: January 2020

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.

Keywords: Energy access, real‐purchase offer, reference dependence, supply chains, technology adoption, willingness to pay

Suggested Citation

Bensch, Gunther and Peters, Jörg, One‐Off Subsidies and Long‐Run Adoption—Experimental Evidence on Improved Cooking Stoves in Senegal (January 2020). American Journal of Agricultural Economics, Vol. 102, Issue 1, pp. 72-90, 2020, Available at SSRN: https://ssrn.com/abstract=3558954 or http://dx.doi.org/10.1093/ajae/aaz023

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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