| Abstract: |
Price discounts are a common policy tool to promote agricultural technology
adoption in low-income settings, yet their effectiveness may be limited when
farmers face uncertainty or have access to familiar alternatives. We test this
through a randomized controlled trial with shrimp farmers in southwestern
coastal Bangladesh, a region highly exposed to climate shocks. The government
promotes Specific Pathogen Free (SPF) post-larvae (PL)—certified as
disease-free—to reduce high mortality in shrimp farming. Farmers were randomly
offered varying discount levels for two SPF-PL types, differing in size
uniformity and market price (proxies for quality), with the highest discount
reducing their prices to parity with conventional non-SPF PL. We find no
significant effect of discounts on adoption of the lower-priced Mid-grade
SPF-PL, characterized by less size uniformity. In contrast, discounts
significantly increased adoption of the higher-priced, more uniform
Premium-grade SPF-PL, raising uptake by 10–19 percentage points among active
shrimp farmers. Larger discounts did not yield higher adoption than smaller
ones, indicating diminishing returns to discount generosity. Heterogeneity
analyses reveal behavioral and contextual mechanisms: prior exposure to
Mid-grade SPF-PL reduced its subsequent adoption but increased responsiveness
to Premium-grade, consistent with experience effects and reference dependence.
Cyclone exposure dampened treatment responses, suggesting capital constraints,
while infrastructure preparedness (e.g., nursing facilities) enhanced uptake.
These findings underscore that in high-risk agricultural systems, price
incentives alone may not drive adoption unless the promoted input is perceived
as effective. Successful promotion strategies must integrate quality assurance
with attention to farmer experience, behavioral biases, and vulnerability to
shocks. |