We document and evaluate an informal market for electricity resale in Abomey-Calavi, Benin, where nearly half of electrified households purchase power from neighbors who resell their formal electricity. Informal resellers offer a different contract than the utility: a low connection charge in exchange for a high price per kWh. We combine a field experiment that randomizes connection charges and marginal prices with a structural model of electricity demand and supply. Our estimates imply that informal electricity raises electrification rates by 20 percentage points but generates only modest gains in consumer surplus as households consume little electricity. The national utility can more than double formal electrification rates and raise consumer surplus by offering an alternative tariff with lower connection charges and higher marginal prices.
