Can higher prices stimulate product use?
Subtitle: evidence from a field experiment in Zambia
By: Nava Ashraf, James Berry, Jesse M. Shapiro
Contributors: Berry, James; Shapiro, Jesse; Harvard Business School. Division of Research
Edition: Rev.
Series: Working paper / Division of Research, Harvard Business School -- 07-034; Working paper (Harvard Business School. Division of Research) -- 07-034
Publisher: Harvard Business School
Published: 2007
Place of publication: Boston]
Language: eng
Number of pages: 60
Description: The controversy over whether and how much to charge for health products in the developing world rests, in part, on whether higher prices can increase use. We test this hypothesis in a field experiment in Zambia using door-to-door marketing of a home water purification solution. Our methodology separates the screening effect of prices (charging more changes the mix of buyers) from the psychological effect of prices (charging more stimulates greater use for a given buyer). We find that higher prices screen out those who use the product less. The amount paid does not have a psychological effect on use, but there is some evidence that the act of paying increases use. We use our data to estimate an economic model of product use, simulate counterfactuals, and develop tentative implications for pricing policy.
Notes: "Revised June 2007"--Publisher's website.

"June 2007"--Added t.p.

Includes bibliographical references.