  Governments spend billions of dollars subsidizing the adoption of different
goods. However, it is difficult to gauge whether those goods are resold, or are
valued by their ultimate recipients. This project studies a program to
subsidize the adoption of mobile phones in one of the poorest countries in the
world. Rwanda subsidized the equivalent of 8% of the stock of mobile phones for
select rural areas. We analyze the program using 5.3 billion transaction
records from the dominant mobile phone network. Transaction records reveal
where and how much subsidized handsets were ultimately used, and indicators of
resale. Some subsidized handsets drifted from the rural areas where they were
allocated to urban centers, but the subsidized handsets were used as much as
handsets purchased at retail prices, suggesting they were valued. Recipients
are similar to those who paid for phones, but are highly connected to each
other. We then simulate welfare effects using a network demand system that
accounts for how each person's adoption affects the rest of the network.
Spillovers are substantial: 73-76% of the operator revenue generated by the
subsidy comes from nonrecipients. We compare the enacted subsidy program to
counterfactual targeting based on different network heuristics.
