There are two main economic rationales to do so.
SUPPLY INSHORT RUN FOR FREE
An important question yet to be answered is how to increase adoption of these technologies.Ī commonly proposed way to increase adoption in the short run is to distribute those essential health products for free or at highly subsidized prices ( WHO (2007), Sachs (2005)). It is estimated that nearly two thirds of these deaths could be averted using existing preventative technologies, such as vaccines, insecticide-treated materials, vitamin supplementation, or point-of-use chlorination of drinking water ( Liu et al. In 2010, an estimated 7.6 million children died before the age of five ( Liu et al. We black then discuss the types of products and the contexts inherit for which these results may apply. Estimation results show a large, positive learning effect but no anchoring. To separately identify the learning and anchoring effects, we estimate a parsimonious experience-good model. Reduced form estimates show that a one-time subsidy has a positive impact on willingness to pay a year later inherit. This paper uses data from a two-stage randomized pricing experiment in Kenya to estimate the relative importance of these effects for a new, improved antimalarial bed net. But for experience goods, one-off subsidies could also boost long-run adoption through learning. How do they affect long-run adoption? A common fear among development practitioners is that one-off subsidies may negatively affect long-run adoption through reference-dependence: People might anchor around the subsidized price and be unwilling to pay more for the product later. Short-run subsidies for health products are common in poor countries.
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