Trouble with zero: The limits of subsidizing technology adoption

Pallavi Shukla, Hemant Pullabhotla and Kathy Baylis

Journal of Development Economics, 2022, vol. 158, issue C

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.

Keywords: Reference dependence; Technology adoption; Agricultural subsidies; Zero price (search for similar items in EconPapers)
JEL-codes: D91 O13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:158:y:2022:i:c:s0304387822000773

DOI: 10.1016/j.jdeveco.2022.102920

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