_1_ Government intervention in education is often predicated on market failures.<sup>1</sup> However, addressing such failures does not require government _provision_ . This recognition has allowed alternate schooling models that separate the financing and provision of education by the state to emerge. These range from vouchers in developing countries (Hsieh and Urquiola, 2006; Muralidharan et al., 2015; Barrera-Osorio et al., 2017) to charter schools in the United States (Hoxby and Rocko↵, 2004; Hoxby et al., 2009; Angrist et al., 2013; Abdulkadiro ̆glu et al., 2016) and, more recently, to public–private partnership arrangements with private school chains (Romero et al., 2017). One key consideration is that the impact of these interventions is mediated by the underlying market structure. Yet, establishing the causal impact of such policies on schools and understanding how the impact is mediated by program design and the prevailing market structure is challenging.

The rise of private schooling in low- and middle-income countries o↵ers an opportunity to map policies to school responses by designing market-level interventions that uncover and address underlying market failures. In previous work, we have leveraged “closed” education markets in rural Pakistan to identify labor and informational market failures and evaluated interventions that ameliorate them and improve education outcomes (Andrabi et al., 2013, 2017).<sup>2</sup> In addition to these failures, data from our longitudinal study of rural schooling markets and interviews with school owners suggest that private schools also lack access to financing, with few external funding sources outside their own families.

Here, we present results from an experiment that alleviated _financial constraints_ for private schools in rural Pakistan. We study how this intervention a↵ects educational outcomes and how variations in intervention design interact with market structure. Specifically, our experiment allocates an unconditional cash grant of Rs.50,000 ($500 and 15 percent of the median annual revenue for sample schools) to each treated (private) school from a sample of 855 private schools in 266 villages in the province of Punjab, Pakistan. We assign villages to a control group and one of two treatment arms: In the first treatment, referred to as the ‘low-saturation’ or _L_ arm, we o↵er the grant to a single, randomly assigned, private school within the village (from an average of 3.3 private schools). In the second treatment, the ‘high-saturation’ or _H_ arm, all private schools in the experimentally assigned village are o↵ered the Rs.50,000 grant.

The motivation for this experimental design is twofold. First, it helps examine whether limited financial access hinders private school quality and expansion. Even if private schools lack access to finance, it is not immediately clear that the

> 1Examples include credit market failures for households (Carneiro and Heckman, 2002), the lack of long-term contracting between parents and children (Jensen, 2012), and the social externalities from education (Acemoglu and Angrist, 2000).

> 2Private sector primary enrollment shares are 40 percent in countries like India and Pakistan and 28 percent in all LMIC combined with significant penetration in rural areas (Baum et al., 2013; Andrabi et al., 2015). Because villages are “closed”— children attend schools in the village and schools in the village are mostly attended by children in the village— it is both easier to define markets and to isolate the impact of interventions on a schooling market as a whole.