Fixed Costs, Spillovers, and Adoption of Electric Connections

Manuel Barron and Maximo Torero

MPRA Paper from University Library of Munich, Germany

Abstract: We exploit exogenous variation in the price of connection fees to study the process of adoption of for formal connection to the electric grid in northern El Salvador. This variation, generated by randomly allocating discount vouchers among households, also generated exogenous variation in the share of neighbors receiving a discount ("voucher intensity"). We find that discount vouchers accelerated demand for formal connections, especially among households with an informal connection at baseline. We provide evidence that voucher intensity did not crowd out formal connections by facilitating informal access to the grid. Finally, we show that the electric utility could increase its customer base, revenue flows and profits by sharing part of the connection fee in the early years of an electrification project.

Keywords: Rural; Electrification; Spillovers; Fixed; Costs; Adoption (search for similar items in EconPapers)
JEL-codes: O13 O33 (search for similar items in EconPapers)
Date: 2015-02-27
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (1)

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