Development Economics

CERGE-EI Foundation Distance Course 2022/23

Lecturer: M. Miotto

Problemset on Infrastructure

1. TRUE/FALSE: An industry characterised by high fixed costs and increasing marginal

costs is a typical natural monopoly.

2. In Lee et al. (2019), how are the authors able to identify a causal relationship
between electrification and various outcomes (which identification strategy do they
use)? Please explain.

3. In Lee et al. (2019), why do researchers split the 75 treatment communities in three
different sub-groups of 25 each?

4. In a natural monopoly, when should the social planner proceed with building
infrastructure projects?

5. TRUE/FALSE: In Lee et al. (2019) the demand curve (take up) for electrification falls
sharply as a function of prices.

6. In Lee et al. (2019) we see that the demand for electrification is very low, even when
partially subsidised. What are the reasons the authors mention to be possibly
explaining this pattern?

7. In Lee et al. (2019), how do authors try to see if there are desirability bias during
individuals’ surveys?

8. What are the two identification assumptions for a Regression Discontinuity Design?

9. What is the difference between sharp and fuzzy Regression Discontinuity Design?

10. In Asher and Novosad (2019) the frequency of villages’ population shows there is
manipulation of population numbers in the data collected for and used to determine
village eligibility for roads. How do the authors proceed given this identification
problem?