Solar demand of small firms

Last registered on July 24, 2024
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Pre-Trial

Trial Information

General Information

Title
Solar demand of small firms
RCT ID
AEARCTR-0013802
Initial registration date
June 18, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
June 24, 2024, 2:08 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
July 24, 2024, 8:16 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
Kenya
Region
Nakuru, Rift Valley

Primary Investigator

Name
Jiayue Zhang
Affiliation
Brown University
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Other Primary Investigator(s)

PI Name
Yunyu Shu
PI Affiliation
Brown
Contact Investigator

Additional Trial Information

Status
In development
Start date
2024-07-01
End date
2024-12-31
Keywords
Behavior, Environment & Energy, Finance & Microfinance, Firms & Productivity
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
The adoption of green technology in developing countries is essential for sustainable development. However, willingness-to-pay (WTP) for green technology remains low in many of these regions. Traditional WTP assessments do not adequately capture the complexities of credit-based purchases, where payments are distributed over time and agents are time-inconsistent and credit constrained. This project evaluates WTP for credit-based purchases over two dimensions of down payment and repayments, with a focus on affordable clean energy solutions. By understanding how small business owners value credit purchases, we can better design and implement green technology initiatives and subsidy policies targeting similar products and further evaluate the impact of clean-energy product adoption on business performances.
External Link(s)

Registration Citation

Citation
Shu, Yunyu and Jiayue Zhang. 2024. "Solar demand of small firms." AEA RCT Registry. July 24. https://doi.org/10.1257/rct.13802-1.1
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Experimental Details

Interventions

Intervention(s)
The intervention consists of randomized subsidies for credit purchase contracts of solar lamps. Each firm owner in the down payment treatment group faces a subsidized contract with a random amount of subsidy for the down payment, and a market contract. Each firm owner in the tailored treatment group faces two subsidized contracts with a random amount of subsidy applied to either the down payment or the repayment. Each firm owner in the control group faces a market contract and another contract clearly dominated by the market contract. Each respondent chooses to adopt one or none of the two contracts.

The market contract is down payment of 800 KES and a daily repayment of 24 KES for 390 days, or equivalently, a weekly repayment of 168 KES for 56 weeks.

In the down payment treatment group, the random amount of subsidies are drawn from {95, 189, 284 , 378, 473} KES. The subsidy amount is directly subtracted from the market contract down payment of 800 KES.

In the tailored treatment group, the random amount of subsidies are drawn from {95, 189, 284 , 378, 473} KES. For the contract with down payment subsidy, the subsidy amount is directly subtracted from the market contract down payment of 800 KES. For the contract with repayment subsidy, the subsidy is applied to the first 4 week weekly payments according to the following arrangement: Subsidy of 95 is applied by offering 1 free day for every 6 daily payments made, up to 4 times. Subsidy of 189 is equivalent to 2 free days for every 5 daily payments made, up to 4 times. Subsidy of 284 is equivalent to 3 free days for every 4 daily payments made, up to 4 times. Subsidy of 378 is equivalent to 4 free days for every 3 daily payments made, up to 4 times. Subsidy of 473 is equivalent to 5 free days for every 2 daily payments made, up to 4 times. The equivalence is drawn by assuming no skipping and a discount rate used by the solar company.
Intervention Start Date
2024-07-29
Intervention End Date
2024-09-30

Primary Outcomes

Primary Outcomes (end points)
WTP for credit purchase of solar lamp, solar lamp adoption, repayment frequency, default, firm performance (sales, profits, hours of operation), firm owner labor input
Primary Outcomes (explanation)
WTP for credit purchase of solar lamp is elicited through a BACE procedure

Secondary Outcomes

Secondary Outcomes (end points)
Alternative energy usage, perceived impact of blackout on firm performance
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Firm owners are randomized into three groups: (1) Down payment subsidy group, (2) Tailored subsidy group, and (3) Control group.

We will use the Bayesian Adaptive Choice Experiment (BACE) to estimate WTP by varying key parameters over multiple discrete choice questions (Drake et al., 2022). We adjust BACE to be incentive compatible by randomly implementing the respondent's choice of one of the questions.

During the BACE procedure, each firm owner will choose one of the three options in each of the 16 discrete choice questions. In each question, the three options include two contracts with different down payment and repayment structures, and a third option of "none of the two". The two contracts for each of the 15 questions will be adaptively determined according to a Bayesian rule. Options in the remaining 1 question will be determined before the BACE procedure according to treatment assignment, randomly assigned an order among the 16 questions, and implemented after completing all 16 questions.

The two contracts in the implemented question are determined according to the Intervention section above.

Experimental Design Details
Not available
Randomization Method
The randomization is done in an office by a computer.
Randomization Unit
The randomization is done at the level of the individual firm owner.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
750 individual firm owners
Sample size: planned number of observations
750 individual firm owners
Sample size (or number of clusters) by treatment arms
250 firm owners in control, 250 firm owners in down payment subsidy, 250 firm owners in tailored subsidy
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
EGERTON UNIVERSITY ETHICS REVIEW COMMITTEE
IRB Approval Date
2023-10-18
IRB Approval Number
EUISERC/APP/285/2023
IRB Name
Brown University
IRB Approval Date
2024-07-12
IRB Approval Number
MOD00001324
Analysis Plan