Do the prices of a preventive animal health product affect dairy farmers’ willingness to pay and product use? Evidence from an experimental study

A G Cariappa, B.S. Chandel, R. Sendhil, Anil Dixit (), Gopal Sankhala, Veena Mani and B.S. Meena
Authors registered in the RePEc Author Service: Sendhil Ramadas

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2022, vol. 100, issue C

Abstract: Should we distribute preventive animal health products for free or charge a positive price? The decision depends on the price sensitivity of the product and the effect prices have on product use. We explore this idea through a field experiment in which we randomize the price a farmer faces for an animal health product. We find that the demand for the product is highly sensitive to offer prices; willingness to pay (WTP) decreased from 44% at ₹ 100 to 18% at ₹ 500. Further, among farmers who were willing to pay, the product usage rate was 71% and usage did not increase in offer prices (lack of screening effect). Furthermore, we find that farmers whose animals were sick in the baseline had a higher WTP. These findings support the human capital model relating to demand for human health products. We argue that individuals behave in a similar way when the decisions concern their own health or the health of an animal they rear for commercial purposes. A highly subsidized distribution of the product is recommended due to high price sensitivity, lack of screening effect, equitable distribution among poor and lesser implementation costs found in this study.

Keywords: Willingness to pay; Price experiment; RCT; Screening effect; Animal health (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:100:y:2022:i:c:s2214804322000970

DOI: 10.1016/j.socec.2022.101925

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