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Is the Cure Worse than the Disease? Unintended Effects of Payment Reform in a Quantity-based Transfer Program

Katherine Meckel

NBER Working Paper No. 26725
Issued in January 2020
NBER Program(s):Children, Public Economics

Quantity vouchers are used in redistributive programs to shield participants from price variation and alter their consumption patterns. However, because participants are insensitive to prices, vendors of program goods are incentivized to price discriminate between program and non-program customers. I study these trade-offs in the context of a reform to reduce price discrimination in the Supplemental Nutrition Program for Women, Infants, and Children (WIC), which provides a quantity voucher for nutritious foods to low-income mothers and children. The reform caused vendors to drop out, reducing program take-up. In addition, smaller vendors increased prices charged to non-WIC shoppers by 6.4%.

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Document Object Identifier (DOI): 10.3386/w26725

Published: Katherine Meckel, 2020. "Is the Cure Worse than the Disease? Unintended Effects of Payment Reform in a Quantity-Based Transfer Program," American Economic Review, vol 110(6), pages 1821-1865. citation courtesy of

 
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