UC Berkeley

Many markets for important goods and services are regulated to address market inefficiencies. This dissertation presents research on regulating goods and service quality, with a focus on two important markets in rural Kenya. The first is the market for hybrid maize seeds, an important agricultural input for the production of a staple grain. The second is electricity services, important for communication, lighting, and other productive household and commercial uses. In the rural Kenyan setting, both of these markets feature inconsistent quality, with one being dominated by many small private suppliers, and the other characterized by a single nationwide provider. The three chapters will study different aspects of measuring quality and policies that may be effective in regulating quality in these and similar settings.

The first chapter, joint with Anne Wacera Wambugu, examines whether improving consumer information can improve the quality of goods supplied by sellers. We examine this question in rural markets for hybrid maize seed in Kenya, a context in which goods quality is difficult for buyers to observe. To understand the impacts of improved consumer information, we implement a market-level intervention, randomizing rural markets in Kenya into a community-wide information campaign. Small-scale maize farmers in treated market areas were trained to identify hybrid maize seed that is quality-verified under national seed regulations. We find that observable markers on seed packets can predict seed quality, and treatment increased knowledge of these markers and affected seed purchase decisions. We show that gains in yields were experienced among subgroups of informed buyers that had larger gaps between baseline seed quality and national standards. However, we do not see effects on seed quality offered to uninformed buyers in the same communities.

The second chapter, joint with Catherine Wolfram, Edward Miguel, and Susanna Berkouwer, examines whether contracting conditionality imposed by multilateral organizations can affect the quality of electricity infrastructure and electricity services in a large donor-financed mass electrification project in Kenya. We provide causal evidence on this topic by leveraging an unusual feature of this nationwide program: the quasi-random allocation of multilateral funding sources across nearby villages. The sample consists of mass-electrification sites funded by the African Development Bank or the World Bank. After construction, we collect outcome data in these communities on local infrastructure quality and on the quality of household electricity services. We find that more stringent World Bank contracting procedures led to improved pole quality, but somewhat delayed construction completion and minimal other differences in construction quality and the quality of electricity services. In comparison, a randomized audit scheme modestly improved household electricity usage.

The third chapter, joint with Anne Wacera Wambugu, turns to the issue of measuring electricity quality in a critical area of policy interest--electricity for rural healthcare services. This chapter offers a case study on the productive use of electricity and the consequences of low-quality electricity service. We find that power outages are common, with the majority of health facilities experiencing an outage in the past 30 days. Back-up power sources, while common, only partially mitigate the negative effects of episodes of poor electricity quality.

Taken together, these three chapters examine important questions related to the regulation of goods and service quality. While focused on two markets in rural Kenya, the findings have broader implications. Findings from Chapter 1 suggest that increased numbers of informed end-users may improve quality obtained from private suppliers. However, the broader market-wide impacts may be limited without a very high saturation of informed buyers. This can help inform the role of government agencies in promoting the spread of consumer information as part of their regulatory responsibilities. Findings from Chapter 2 suggest that different kinds of contracting conditionality imposed by financiers of projects in low and middle income countries may have some positive though limited effects. More extensive use of ex-post audits, though, may be an opportunity to improve the quality of the resulting infrastructure and services at relatively low cost. Findings from Chapter 3 emphasize that these policies levers matter. By focusing on the role of electricity service quality in the healthcare sector in Kenya, this chapter shows that improvements in the regulation of public service quality are likely to impact firm productivity.