What Impedes Efficient Adoption of Products? Evidence from Randomized Sales Offers for Fuel-Efficient Cookstoves in Uganda

David, Levine I.; Beltramo, Theresa; Blalock, Garrick; Cotterman, Carolyn; Simons, Andrew M.

doi:10.1093/jeea/jvx051

Cited by 73 publications

(57 citation statements)

References 65 publications

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“…In the literature on technology adoption in developing countries, recent research by Levine et al (2012) and Guiteras et al (2013) is similar to ours. In an experimental study, Levine et al (2012) find that a short, one-week trial period significantly increases the adoption of efficient cookstoves in Uganda, especially in conjunction with time payments and the right to return the stove, often increasing the share of adopting households from a low baseline by a factor of ten. They also provide suggestive evidence for the relevance of both liquidity constraints and time preferences.…”

Section: Related Literaturesupporting

confidence: 88%

“…The lack of strong treatment effects is also probably related to the low WTP overall. The products sold in the Levine et al () and Guiteras et al () studies were more expensive and apparently of much greater interest to the study subjects. For the study of the emerging solar market, a natural next step would be to conduct similar experiments with more expensive but perhaps desirable products, such as the installation of SHSs.…”

Section: Discussionmentioning

confidence: 99%

“…Moreover, liquidity constraints and consumption behavior of households in developing countries have been studied mostly on the production side. Indeed, Levine et al () find that time payments increased uptake of charcoal stoves in Uganda. The same holds for water filters in urban Bangladesh (Guiteras et al, ).…”

Section: Willingness To Pay For Solar Technology: Theory and Hypothesesmentioning

confidence: 99%

“…Failure to invest in welfare‐improving technologies appears to be common in developing countries, and many development economists have attempted to find out the reasons for this failure. One possibility is that, since solar technologies are relatively new, consumers are worried about low quality and are unwilling to pay for them because of the perceived risk of a malfunctioning product (Asfaw & Admassie, ; Dercon & Christiaensen, ; Foster & Rosenzweig, ; Guiteras, Levine, Polley, & Quistorff, ; Levine, Beltramo, Blalock, & Cotterman, ). Liquidity constraints and affordability are another key hypothesis, with evidence ranging from the nonadoption of fertilizer to the low demand for clean cookstoves and, indeed, solar lanterns (Duflo, Kremer, & Robinson, ; Giné & Yang, ; Grimm, Munyehirwe, Peters, & Sievert, ; Mobarak, Dwivedi, Bailis, Hildemann, & Miller, ).…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Willingness to Pay for Solar Lanterns: Does the Trial Period Play a Role?

Yoon

Urpelainen

Kandlikar

2016

Review of Policy Research

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Where electricity access is limited, solar lanterns are a viable and relatively inexpensive source of basic lighting for households. However, the creation of commercially viable business models for solar lanterns is difficult because the customers are poor and make decisions under tight liquidity constraints. To understand the economics of technology adoption in the case of solar lanterns, we conduct a field experiment on willingness to pay (WTP) for solar lanterns in rural Uttar Pradesh. Applying the Becker-DeGroot-Marschak method of eliciting WTP, we evaluate the ability of a trial period and postponed payment to increase sales. We find no evidence for the effectiveness of the trial period and only weak evidence for the positive effect of postponed payment. Overall, WTP for the product among the customers is low. There is no clear evidence for concerns about the uncertain quality of the product, liquidity constraints, or present-bias. In this context, policies to subsidize very small solar lanterns would not correct a market failure, as people appear to have only a limited interest in the product.

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Section: Related Literaturesupporting

confidence: 88%

Section: Discussionmentioning

confidence: 99%

Section: Willingness To Pay For Solar Technology: Theory and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Willingness to Pay for Solar Lanterns: Does the Trial Period Play a Role?

Yoon

Urpelainen

Kandlikar

2016

Review of Policy Research

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“…Second, our application domain of offgrid energy products in developing economies, adds to the novelty and relevance of studying an engagement effect. In particular, although liquidity constraints (Cole et al 2013, Levine et al 2018) and transaction costs (Economides and Jeziorski 2017, Jack and Suri Indeed, these firms are commercializing assets of non-trivial value, which consumers possess and use before paying for them in full. Bad payment behavior by customers results in significant recovery efforts and operational costs by these firms; moreover, only a fraction of the defaulted devices are eventually repossessed by distributors.…”

Section: Engagement and Bundling Effects: Basis And Descriptive Evidencementioning

confidence: 99%

How Do Usage and Payment Behavior Interact in Rent‐to‐Own Business Models? Evidence from Developing Economies

Guajardo

2019

Production and Operations Management

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The diffusion of technological innovations in developing economies has been facilitated by the use of rent‐to‐own business models, which give flexibility to customers by allowing them to make incremental payments over time. Understanding the implications of this flexibility is a fundamental problem for an increasing number of firms operating in these markets. In this study, we empirically analyze how consumer usage and payment behaviors interact in an application of rent‐to‐own to the distribution of solar lamps in developing countries. By exploiting the longitudinal variation in the data—and hence accounting for intrinsic differences between customers—the analysis led to three main insights. First, higher usage rates lowered the probability of late payments by customers. Our characterization of this engagement effect enhances existing knowledge of the drivers of payment behavior in these environments. Second, customers often “bundled” payments, making advance payments for future product access. We showed that bundling the initial payment led to lower usage rates (bundling effect), suggesting that firms may not benefit from advance payments upfront, and that they should closely track usage patterns from these customers. Finally, we showed that first‐period usage information can improve the accuracy of predictive models of default and that observing usage rates in subsequent periods does not lead to further improvements. Overall, the analysis highlights the importance for firms of jointly tracking and analyzing payment and usage behavior by customers, particularly in initial stages of the adoption process.

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Opting for plug-in hybrid electric vehicles in Uganda: a non-cooperative game

Ssebbugga-Kimeze

2022

Mitig Adapt Strateg Glob Change

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What Impedes Efficient Adoption of Products? Evidence from Randomized Sales Offers for Fuel-Efficient Cookstoves in Uganda

Cited by 73 publications

References 65 publications

Willingness to Pay for Solar Lanterns: Does the Trial Period Play a Role?

Willingness to Pay for Solar Lanterns: Does the Trial Period Play a Role?

How Do Usage and Payment Behavior Interact in Rent‐to‐Own Business Models? Evidence from Developing Economies

Opting for plug-in hybrid electric vehicles in Uganda: a non-cooperative game

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