Publication Type
Journal Article
Journal Name
American Journal of Agricultural Economics
Publication Date
3-1-2025
Abstract
We study how temporary provision of an agricultural innovation at zero cost affects long-run demand for that innovation. Our experimental design enables us to distinguish between an “anchoring effect” of subsidies and a “learning effect.” We document large and persistent anchoring and learning effects. For the innovation that we consider, an integrated pest management (IPM) package for Ethiopian smallholder farmers, the learning effect dominates the anchoring effect, so temporary subsidized provision promotes long-run technology diffusion.
Keywords
free input provision, full subsidies, reference-dependent preferences, technology adoption
Recommended Citation
Balew, S., Bulte, E., & Kassie, M. (2025). Short-run subsidies and long-run willingness to pay: Learning and anchoring in an agricultural experiment in Ethiopia. American Journal of Agricultural Economics, 107 (2), 655-669. https://doi.org/10.1111/ajae.12498