Strategic experimentation among microenterprises

A large body of macroeconomic evidence suggests that lower innovation explains a lack of income convergence between poor and rich countries. But the microeconomic mechanisms through which poverty distorts innovation are not well understood. This study aims to test whether risk aversion and supply chain uncertainty reduce the experimentation of microenterprises below socially efficient levels. The study also pilots a secondary intervention aimed at understanding the role of non-excludability. I aim to test whether these frictions bind using a randomized controlled trial (RCT) in which small retailers are offered a stock of a new product which prior work suggests has unmet demand. I plan to randomize whether enterprises have the ability to return units of a first order or guaranteed access to a permanent supplier. I also plan to pilot exclusive access to stock of the product, but this is secondary because of natural expansion of the market. I will examine whether each intervention increases experimentation with the new product and whether the treatments induce higher permanent entry into the market, which would indicate that experimentation is inefficiently low absent the interventions. These treatments are designed to test a model of firm experimentation that generalizes to other microenterprises, and a set of secondary mechanism experiments may be completed later to rule out confounds. This study takes place in the context of a new motorcycle helmet, yielding large potential public health benefits from the research.