Vatsala SHREETI 's PhD Thesis, July 7th

July 07, 2022 Research

 Vatsala SHREETI will defend her thesis on Thursday 7July at 15:00 (zoom)
« Three essays on technology adoption in emerging markets  »
Supervisor: Professor Renato GOMES and Stéphane STRAUB

To attend the conference, please contact the secretariat Elvire Jalran

Memberships are:

  • Renato GOMES, Toulouse School of Economics, UT1 Capitole, Directeur de thèse
  • Stéphane STRAUB, Toulouse School of Economics, UT1 Capitole, Co-directeur de thèse
  • Isis DURRMEYER, Toulouse School of Economics, UT1 Capitole, Examinateur
  • Helena PERRONE, University of Mannheim, Rapporteure
  • Tommaso VALLETTI, Imperial College London, Examinateur
  • Daniel BJORKEGREN, Brown University, Rapporteur 

Abstract :

This thesis studies technology adoption in an emerging market, taking the example of India. In chapter I, I study the adoption of smartphones in India. Smartphones have become the primary device through which people in developing countries can access the benefits of widespread digitization. However, most mobile phone users in developing countries continue to use low-quality feature phones. This chapter develops a structural model of consumer demand and supply to understand the main drivers of smartphone adoption. It then uses the estimates of the model to investigate how to best design pro-adoption policies. I find that gains in device quality and changes in income distribution are the main factors behind the growth of smartphone sales in India. Given the central role of income in driving adoption, I simulate the impact of targeted subsidies for smartphones. I find that, compared to ad valorem tax reductions and uniform subsidies, targeted subsidies are the least costly for the government and are the most effective for redistribution, being (almost) fully appropriated by consumers.
Chapter II focuses on digital financial services. The use of digital financial services (DFS) in developing countries can be a tool for financial inclusion, curbing tax evasion, and facilitating the efficient delivery of public services. Using a unique event – an un-announced and large scale demonetization process that took place in 2016 in India that increased the short-term costs of holding and transacting in cash, this chapter studies the uptake of a specific form of DFS, namely mobile payments, in India. We find that in states where the labour market was less formal, and where workers were more likely to be affected by the demonetisation process, this shock led to a larger increase in the use of platforms larger than in states where the labour market is more formal. The effect of this "forced experimentation" was, however, short lived. At the individual level, people who were more exposed to the shock were more likely to adopt mobile payments and this effect persists over the next two years. Strikingly, the marginal effects of the shock for high-exposure women was almost twice as high as for high-exposure men. Our results contribute to understanding user behaviour and persistence of habits, with important implications for the design of policies aimed at increasing the uptake of digital payment technologies.
In the final chapter of this thesis, I (with a co-author) study firms’ adoption of a new technology in their product portfolio. In particular, we attempt to understand the value of an easily imitable technology in an emerging market context. We study the introduction of dual SIM handsets in the Indian mobile phone market and quantify the value of this technology for consumers. We also quantify the impact on market outcomes of the quick imitation of this technology by competing firms. We find that the introduction of dual SIM handsets led to an increase in the consumer surplus of 3.1% to 8.9%, and an expansion in the total size of the market by 1.8% to 3.3%. We also find that while imitation reduced the innovator’s profit substantially, it also made the technology much more affordable. In the absence of imitation, consumer prices would have been 22% higher. Finally, we provide a lower-bound on the innovator’s cost of protecting intellectual property in an emerging market. We find this lower bound to be as high as 12% of the innovator’s observed profits ($ 29.5 million).