The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
Solar lanterns are a relatively inexpensive renewable-energy option for household lighting in developing countries. However, the transition to these lighting sources is slow. To understand why, this study uses the Becker-Degroot-Marschak bidding me...
| Main Authors: | , , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/886181616531982023/The-Effect-of-Information-and-Subsidy-Measures-on-Adoption-of-Solar-Lanterns-An-Application-of-the-BDM-Bidding-Mechanism-in-Rural-Ethiopia http://hdl.handle.net/10986/35307 |
| Summary: | Solar lanterns are a relatively
inexpensive renewable-energy option for household lighting
in developing countries. However, the transition to these
lighting sources is slow. To understand why, this study uses
the Becker-Degroot-Marschak bidding mechanism in a
randomized field experiment to investigate the effect of
information provision and subsidy policy instruments on the
uptake of solar lanterns. Subjects’ willingness to pay tends
to be low enough that most of them would purchase the solar
lantern only if it is subsidized. Households with access to
grid electricity have a lower willingness to pay and are
less likely to adopt, while those using kerosene as a source
of lighting are more likely to adopt. Access to credit also
increases willingness to pay. Information treatments have
limited impact: provision of different types of information
about the private and public benefits of solar lantern use
increases adoption only when it is combined with a high
level of subsidies. Given the relatively low cost of solar
lanterns, the results suggest that achieving universal
electricity access under the United Nations’ Sustainable
Development Goals by any means will require subsidizing access. |
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