Does purchase price matter on the use of energy efficient technologies: Experimental Evidence from rural Ethiopia?

Sied Hassen

Environment and Climate Research Center

Ethiopian Development Research Institute

22 April 2016

Does purchase price matter on the use of energy efficient technologies: Experimental Evidence from rural Ethiopia?

Abstract 

In this study we conducted a randomized experiment in rural Ethiopia to test whether sunk and screen effects matter on how quickly the energy efficient technologies are in use. A result based on a follow up data and the baseline survey shows that there is no difference in the length of use between those that get the energy efficient technology for free and those that paid money for it (i.e absence of sunk cost effect). However, we find a difference in the length of use between those with high valuation for the technology and those with lower valuation for it (i.e an evidence of the screening effect). The insignificant difference between free distribution and purchase villages is against the opinion of development practitioners which mostly reject the option of distributing goods that have public and private benefit for free or with subsidy. This implies that if households have access to clean and energy efficient technologies and acquired it, regardless of how they get it, they can use it.

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