Demand, supply and long-term adoption: Evidence from a storage technology in West Africa

Abstract

Most research on technology adoption focuses on the demand side, emphasizing the role of information provision, financial incentives and nudges. Yet supply plays a critical and oft-overlooked role in facilitating the take-up of new technologies. We study the supply- and demand-side factors affecting the adoption of an improved storage technology (hermetically-sealed bags, or PICS) in Niger, which was introduced and freely distributed in West Africa in the late 2000s. Using surveys, survey experiments and a willingness-to-pay (WTP) experiment with farmers and traders, we find that PICS bags are largely profitable for small-scale farmers as compared to traditional storage technologies. Yet a majority of farmers and traders do not store in PICS bags, and average WTP is approximately 50% of the market price. There is also significant regional variation in adoption and WTP, which cannot be fully explained by differences in production or storage patterns. We find that these adoption patterns are not primarily explained by information frictions or liquidity constraints. While there is some evidence of behavioral barriers to adoption, we posit that the main explanation of these distinct equilibria is variation in supply, driven by a market structure introduced over a decade ago.