The Role of Market Frictions in Demand for Prepaid Electricity

• Tác giả: Megan Lang
• Ngôn ngữ: eng
• Ký hiệu phân loại: 643.33 Housing and household equipment
• Thông tin xuất bản: Washington, DC: World Bank, 2025
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 296763
• Chủ đề: 1. LIQUIDITY RESTRAINTS; 2. PREPAID ELECTRICITY; 3. SOLAR; 4. TRANSACTION COSTS

Tóm tắt

 Prepaid electricity contracts lower enforcement costs but may burden consumers, particularly when market frictions are present. This paper presents the results of a randomized control trial where 2,000 randomly selected, rural Rwandese consumers were offered a line of credit for electricity payments. The line of credit lowered liquidity constraints and transaction costs. Twenty percent of consumers borrowed and demand for the credit was inelastic
  however, the line of credit did not change average demand for electricity. Detailed administrative data reveal that consumers primarily used the line of credit to lower transaction costs, suggesting that rural consumers highly value convenience. The results highlight potential Pareto improvements from more flexible prepaid contracts.