Quality signaling and demand for renewable energy technology: Evidence from a randomized field experiment

Aidan Coville, Joshua Graff Zivin, Arndt Reichert and Ann-Kristin Reitmann ()
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Aidan Coville: BM = WB - La Banque Mondiale = The World Bank - WBG = GBM - World Bank Group = Groupe Banque Mondiale
Ann-Kristin Reitmann: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, Universität Passau [Passau]

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Abstract: Solar technologies have been associated with private and social returns, but their technological potential often remains unachieved because of persistently low demand for high-quality products. In a randomized field experiment in Senegal, we assess the potential of three types of quality signaling to increase demand for highquality solar lamps. We find no effect on demand when consumers are offered a money-back guarantee but increased demand with a third-party certification or warranty, consistent with the notion that consumers are uncertain about product durability rather than their utility. However, despite the higher willingness to pay, the prices they would pay are still well below market prices for the average household, suggesting that reducing information asymmetries alone is insufficient to encourage wider adoption. Surprisingly, we also find that the effective quality signals in our setting stimulate demand for low-quality products by creating product-class effects among those least familiar with the product.

Keywords: Information asymmetries; Quality signaling; Solar lamps; Willingness to pay; Becker-DeGroot-Marschak; Technology adoption (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-dcm and nep-exp
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Published in Journal of Development Economics, 2025, 176, pp.103514. ⟨10.1016/j.jdeveco.2025.103514⟩

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Working Paper: Quality Signaling and Demand for Renewable Energy Technology: Evidence from a Randomized Field Experiment (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05057994

DOI: 10.1016/j.jdeveco.2025.103514

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