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Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia

Resource type
Authors/contributors
Title
Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia
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)
Publication
American Economic Review
Volume
100
Issue
5
Pages
2383-2413
Date
2010-12
Citation
Ashraf, N., Berry, J., & Shapiro, J. M. (2010). Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia. American Economic Review, 100, 2383–2413.
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