Barriers to the Adoption of New Goods

Policy Context

Studies have shown that new products and technologies are slow to diffuse in low and middle-income (LMIC) countries, yet the reasons for this are not well understood. Researchers investigate the barriers to the retail adoption of two new products among small firms in Burundi: a solar lamp that can charge mobile phones and an improved cookstove that uses less charcoal versus conventional models. 

Researchers focus on the role that competition plays in new product adoption. While competition is generally viewed as positive, it can undermine incentives to experiment with new products because the first mover bears the risk that the product will not sell successfully, but other firms can observe the outcome and steal their business if demand is high. High-income countries use patents or exclusive contracts to help prevent these forces, but such arrangements are rare in LMICs. The research team investigate whether offering a temporary period of exclusive product access increases market level adoption using a randomized controlled trial. 

Study Design

Researchers randomize whether 5 shops in a market are offered new product supply exclusively or non-exclusively across 200-250 markets in Burundi. In exclusive markets, a randomly selected shop is the only one given stock of the product for a 6 month period, while in non-exclusive markets any shop can obtain stock. Researchers will then offer randomized price reductions midway through the study to estimate demand. The focus is on the share of markets with a new product seller, and consumer surplus as measured through the demand estimates and product uptake. 

Results and Policy Lessons

Researchers piloted the design with 105 shops across 29 markets. The intervention had little effect on lamp adoption because most shops were interested. But it increased the rate of markets with at least 1 stove adopter from 40% to 100%. About half of shops that adopted stoves sold them successfully, consistent with a real risk of adoption. Anecdotal reports also indicate that shops understand and value the exclusive offer, with common reports of the business stealing concerns that motivate the project. 

Motivated by these pilot results, researchers aim to proceed to scale up the study to the full 200-250 markets and implement the pricing experiments beginning in late June 2025. The research team plans to continue only with the cookstoves as the environment benefit is clearer and there is stronger evidence that business stealing is a major barrier to their adoption from the pilot.