The role of market frictions in demand for prepaid electricity

• 成果类型: Article
• 署名作者: Lang, Megan
• 署名单位: The World Bank
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2025.103495
• 发表日期: 2025
• 关键词: Prepaid electricity; liquidity constraints; transaction costs; solar

摘要

Prepaid electricity contracts lower enforcement costs but may burden consumers, particularly when market frictions are present. I randomly offer 2,000 rural Rwandese consumers a line of credit for electricity payments that lowers liquidity constraints and transaction costs. Twenty percent borrow and demand for the credit is inelastic; however, the line of credit does not change average demand for electricity. Detailed administrative data reveal that consumers primarily use 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.