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Quality Signaling and Demand for Renewable Energy Technology: Evidence from a Randomized Field Experiment

Author

Listed:
  • Aidan Coville
  • Joshua S. Graff Zivin
  • Arndt Reichert
  • Ann-Kristin Reitmann

Abstract

Solar technologies have been associated with private and social returns, but their technological potential often remains unachieved because of persistently low demand for high-quality products. In a randomized field experiment in Senegal, we assess the potential of three types of quality signaling to increase demand for high-quality solar lamps. We find no effect on demand when consumers are offered a money-back guarantee but increased demand with a third-party certification or warranty, consistent with the notion that consumers are uncertain about product durability rather than their utility. However, despite the higher willingness to pay, the prices they would pay are still well below market prices for the average household, suggesting that reducing information asymmetries alone is insufficient to encourage wider adoption. Surprisingly, we also find that the effective quality signals in our setting stimulate demand for low-quality products by creating product-class effects among those least familiar with the product.

Suggested Citation

  • Aidan Coville & Joshua S. Graff Zivin & Arndt Reichert & Ann-Kristin Reitmann, 2024. "Quality Signaling and Demand for Renewable Energy Technology: Evidence from a Randomized Field Experiment," NBER Working Papers 32397, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32397
    Note: DEV EEE
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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