Rationing in an Urban Water Market
I develop a simple model of urban water allocation under capacity constraints, comparing the welfare effects of rationing by intermittent supply, uniform quotas, and optimal pricing. I find that rationing imposes technological costs, while quotas create allocative inefficiency. I estimate the model’s key parameters using the universe of meter-level billing data from Amman, Jordan and a geographic regression discontinuity design that exploits spatial variation in supply schedules.
