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

No 32397, NBER Working Papers from National Bureau of Economic Research, Inc

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 high-quality 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.

JEL-codes: D12 D83 L15 O13 Q41 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-env and nep-exp
Note: DEV EEE
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