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State versus Consumer Regulation

State versus Consumer Regulation

An Evaluation of Two Road Safety Interventions in Kenya

(p.307) 8 State versus Consumer Regulation
African Successes, Volume I
James HabyarimanaWilliam Jack
University of Chicago Press

This paper compares the relative impact of two road safety interventions in the Kenyan minibus or matatu sector: a top down set of regulatory requirements known as the Michuki Rules and a consumer empowerment intervention. We use very detailed insurance claims data on three classes of vehicles to implement a difference-in-differences estimation strategy to measure the impact of the Michuki Rules. Despite strong political leadership and dedicated resources, we find no statistically significant effect of the Michuki Rules on accident rates. In contrast, the consumer empowerment intervention that didn’t rely on third party enforcement has very large and significant effects on accident rates. Our intent-to-treat estimates suggest reductions in accident rates of at least 50%. Our analysis suggests that in institutionally weak environments, innovative consumer-driven solutions might provide an alternative solution to low-quality service provision.

Keywords:   governance, accountability, road safety, consumer empowerment

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