To Charge or Not to Charge: Evidence from a Health Products Experiment on Aid Dependence in Uganda
Presented by:
Maggie McConnell
Global Health Economics
Harvard University
Friday, February 28, 2014
12:00 pm-1:30 pm
Taylor-Hibbard Seminar Room (Rm103)
For health products in developing countries, the question of whether to charge or not to charge is critical for accomplishing common policy objectives
of wide, appropriate and sustainable distribution and usage. Competing philosophical arguments and limited empirical answers have led to constant debate. Theory, and then empirical tests, can provide a way forward. We setup a randomized trial in Northern Uganda to test a theory focused on price expectations and learning across three health products specifically chosen for their likely differences in the scope for learning. In line with prior studies, when the product has potential for positive learning, we find that future demand is not altered by a free distribution. However, for products without scope for positive learning, future demand is lower after a free distribution than after a distribution at market prices.