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Paper Abstract
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Business-training programs are typically offered for free. Charging a price for training provides potential benefits such as financial sustainability, but little is known about how price affects demand. We conducted two experiments in Jamaica using the Becker-DeGroot-Marschak (BDM) mechanism and take-it-or-leave-it offers to estimate the demand for training. Most entrepreneurs have positive willingness to pay for training, but demand falls sharply as price increases. Offering the chance to pay in installments does not increase demand. Higher prices screen out poorer, less educated entrepreneurs who have smaller firms. However, charging a higher price does increase attendance among those who pay. Finally, our paper points to the limitations of using a BDM mechanism in a context of low contract enforcement and when payments for purchasing an intangible service do not occur immediately.
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Paper Citation
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Maffioli, Alessandro, David McKenzie, and Diego Ubfal. Estimating the Demand for Business Training: Evidence from Jamaica.
Economic Development and Cultural Change 2023 72:1, 123-158
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Paper URL
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https://www.journals.uchicago.edu/doi/10.1086/719031
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