Investment in a number of basic technologies (e.g., solar lights, efficient cook stoves, fertilizer, malaria nets, water filters) appear to have large welfare benefits for many households in developing economies. Nevertheless, the development of private markets and rate of adoption of these technologies has been slow. This project integrates development economics with theoretical work on dynamic incentives, by providing trade credit to small-scale entrepreneurs in an experiment in Uganda. In the study, women traders will be offered “free trials” of a good, in this case a low-cost solar lamp, with the right to return any unsold units. The traders will also be provided with dynamic incentives through the promise (and delivery) of future units at a discounted price. Outcomes will be measured through trader surveys as well as sales orders, payments, and credit records. The intervention aims to alleviate the constraints that prevent traders from creating cost-effective distribution chains for the rural poor. Results forthcoming.
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