American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia
American Economic Review
vol. 100,
no. 5, December 2010
(pp. 2383–2413)
Abstract
The controversy over 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 evidence of economically important screening effects. By contrast, we find no consistent evidence of sunk-cost effects. (JEL C93, D12, I11, M31, O12)Citation
Ashraf, Nava, James Berry, and Jesse M. Shapiro. 2010. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia." American Economic Review, 100 (5): 2383–2413. DOI: 10.1257/aer.100.5.2383Additional Materials
JEL Classification
- C93 Field Experiments
- D12 Consumer Economics: Empirical Analysis
- I11 Analysis of Health Care Markets
- M31 Marketing
- O12 Microeconomic Analyses of Economic Development