Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia

Nava Ashraf, James Berry and Jesse Shapiro

No 13247, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The controversy over whether and how much to charge for health products in the developing world rests, in part, on whether higher prices can increase use, either by targeting distribution to high-use households (a screening effect), or by stimulating use psychologically through a sunk-cost effect. We develop a methodology for separating these two effects. We implement the methodology in a field experiment in Zambia using door-to-door marketing of a home water purification solution. We find that higher prices screen out those who use the product less. By contrast, we find no consistent evidence of sunk-cost effects.

JEL-codes: C93 D12 L11 L31 (search for similar items in EconPapers)
Date: 2007-07
New Economics Papers: this item is included in nep-afr, nep-exp and nep-mkt
Note: LS EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)

Published as Nava Ashraf & James Berry & Jesse M. Shapiro, 2010. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia," American Economic Review, American Economic Association, vol. 100(5), pages 2383-2413, December.

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