Abstract
Informal markets for essential services and infrastructure are common in low- and middle-income countries, but whether the informal means of accessing essential services and infrastructure are welfare improving is unclear. We study the phenomenon of "informal electricity connections," where households purchase power from neighbors with utility access instead of directly from the utility. In our setting in Abomey-Calavi, Benin, informal electricity makes up almost half of all electricity connections. This project investigates the welfare and distributional consequences of informality in electricity access. With a partnership with the national utility, we randomize subsidies for the upfront and per-kWh cost for formal and informal sources of electricity for households in Abomey-Calavi, Benin. We plan to evaluate the effects of the randomized subsidies on uptake, electricity consumption, and prices in the informal market.