American Economic Review Vol. 115 No. 10 2025
Treatment Effects in Market Equilibrium
Abstract
Policy-relevant treatment effect estimation in a marketplace setting requires assessing both the direct treatment benefit and spillovers induced by changes to the market equilibrium. We show how to identify and estimate policy-relevant treatment effects using a unit-randomized trial run within a single large market. A Bernoulli-randomized trial allows consistent estimation of direct effects and of treatment-heterogeneity measures that enable welfare-improving targeting. Estimating spillovers—and providing confidence intervals for the direct effect—requires estimates of price elasticities, which we provide using an augmented experimental design. We illustrate our results using a simulation calibrated to a conditional cash-transfer experiment in the Philippines.
- DOI
- 10.1257/aer.20230039
- Volume
- 115
- Issue
- 10
- Pages
- 3273-3321
- Language
- en
- Sources
- openalex crossref