Abstract
Do users value a free technology less than one they pay for? In a two-stage randomized trial of improved grain storage technology in India, we test whether subsequent user willingness-to-pay is affected by free distribution compared to a small positive price. We find paying an initial price of zero has a strong negative effect on users’ long-run willingness-to-pay but is not associated with differences in either reported use or benefits derived from the technology. The lower valuation implies a 20 to 30 percent decrease in long-run adoption, suggesting free distribution can stifle future markets for repeat-purchase goods.
Original language | English (US) |
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Article number | 102920 |
Journal | Journal of Development Economics |
Volume | 158 |
DOIs | |
State | Published - Sep 2022 |
Externally published | Yes |
Keywords
- Agricultural subsidies
- Reference dependence
- Technology adoption
- Zero price
ASJC Scopus subject areas
- Development
- Economics and Econometrics