Trouble with zero: The limits of subsidizing technology adoption

Pallavi Shukla, Hemant K. Pullabhotla, Kathy Baylis

Research output: Contribution to journalArticlepeer-review


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 languageEnglish (US)
Article number102920
JournalJournal of Development Economics
StatePublished - Sep 2022
Externally publishedYes


  • Agricultural subsidies
  • Reference dependence
  • Technology adoption
  • Zero price

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics


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