The Welfare Cost of Non-Price Rationing

The Problem. How do we distribute essential resources when supply is fixed and prices are regulated? Traditional rationing (intermittent supply) creates hidden inefficiencies. I analyzed how alternative market designs – such as flexible pricing or capacity quotas – could improve efficiency and equity.

The Approach.

• Causal Inference: Leveraged a spatial discontinuity (natural experiment) in the supply network to identify causal effects.
• Structural Modeling: Built an equilibrium model of household demand to estimate hidden user costs (shadow prices) that administrative data misses.
• Large-Scale Data: Processed the universe of meter-level billing data (900k+ users) combined with novel survey data.

Key Findings.

• The “Reliability Tax”: The status quo of intermittent supply acts as a regressive tax. Low-income users spend a disproportionate share of expenditure on private storage technology to cope with unreliability.
• Policy Counterfactuals: Simulations show that transitioning to market-clearing prices or quotas would reduce the welfare loss, effectively “refunding” the wasted storage costs back to consumers.