Article | Journal of Economic Behavior & Organization | April 2013

Information and Subsidies: Complements or Substitutes?

by Nava Ashraf, B. Kelsey Jack and Emir Kamenica

Abstract

Does providing information about a product affect the impact of price subsidies on purchases of new or unfamiliar products? This question is particularly relevant for the introduction of health products in developing countries where consumers may be uncertain about product quality and price subsidies are common policy instruments. Through a field experiment selling an unfamiliar health product in Zambia, we find that providing precise information about product specifications significantly increases the impact of the price subsidy on take-up. Taken alone, the information manipulation has no significant impact on demand while the price subsidy substantially increases demand. However, evaluation of either intervention in isolation fails to capture the significant complementarity between the two.

Keywords: subsidies; information; health; Information; Consumer Behavior; Health; Zambia;

Citation:

Ashraf, Nava, B. Kelsey Jack, and Emir Kamenica. "Information and Subsidies: Complements or Substitutes?" Journal of Economic Behavior & Organization 88 (April 2013): 133–139.