Nova School of Business and Economics and NOVAFRICA
Institute for Fiscal Studies
School of Economics and Finance, University of St. Andrews, and Institute for
Working Paper No 2110
Poorly maintained public infrastructure is common in poorer countries, but very little is known about the obstacles leading to such equilibrium. By experimentally identifying the impact of incentives for maintenance for both providers and potential users, this paper provides one of the first economic analyses of provider–user dynamics in the presence of local coordination failure. We randomly allocate shared sanitation facilities in two major Indian cities to either a control or two treatments: the first incentivizes maintenance among providers, while the second adds a sensitization campaign about the returns of a well-maintained facility among potential users. Using a wide range of survey, behavioral and objective measurements, we show that maintenance does not favor collective action.
The treatments raise the quality of facilities and reduce free riding, but at the cost of user selection, with consequences for public health. While potential users’ willingness to pay and cooperation are unaffected, their demand for public intervention increases. Sensitization raises awareness among potential users, but does not alter their behavior.
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