Municipal market redevelopment in Lagos routinely allocates replacement stalls through eligibility lotteries, and the resulting cutoff scores are widely treated as a natural experiment for estimating the effect of allocation on trader compliance with relocation. It develops a design-based evaluation of the regression discontinuity estimator applied to lottery cutoffs, characterising its operating characteristics under a declared variance structure rather than reporting observational estimates. The analysis uses a before-after-control-impact design with between-cluster standard deviation of 6.0, residual standard deviation of 4.5 and intraclass correlation of 0.64, evaluated across 8, 16, 24 and 32 clusters, effect sizes of 3, 5 and 8 percentage points, and 2000 replications per design cell. Power curves, minimum detectable effects, a kernel density of estimated power, coefficient intervals, a receiver operating characteristic and a residual diagnostic are reported. The design attains 80 per cent power at 56 clusters for a 5 percentage point effect. Lottery cutoffs in Lagos markets identify a local compliance effect only under conditions that redevelopment practice rarely satisfies, and that the intraclass correlation of 0.64 imposes a cluster-count floor that most municipal lotteries fall below. The contribution is a bounded methodological result: regression discontinuity at lottery cutoffs is a defensible design for trader relocation research, but only when the cluster structure of market allocation is modelled explicitly and the cutoff is treated as a site of institutional selection rather than an exogenous assignment mechanism.
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Chiamaka Nneka Eze-Uzoamaka (2026) studied this question.
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