We present results from an experiment that randomized the expansion of electric grid infrastructure in rural Kenya. Electricity distribution is the canonical example of a natural monopoly. Randomized price offers show that demand for electricity connections falls sharply with price. Experimental variation in the number of connections combined with administrative cost data reveals considerable scale economies, as hypothesized. However, consumer surplus is far less than total costs at all price levels, suggesting that residential electrification may reduce social welfare. We discuss how leakage, reduced demand (due to red tape, low reliability, and credit constraints), and spillovers may impact this conclusion. (Co-authors K. Lee, C. Wolfram).
At the 2015 UBS Center Forum for Economic Dialogue in Zurich, Ted spoke on the topic of Conflict, Climate and Development in Africa. He spoke on his recent research with co-authors Solomon Hsiang and Marshall Burke on the links between extreme climate and violent conflict (which appeared in Science in 2013 here) and their article on the non-linear realtionship between temperature and economic productivity (Nature 2015 here). He discussed implications for public policy responses and climate change, and the prospects for future African economic development. (Ted starts speaking at minute 31:00.)