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Prices are regulated in many markets, ranging from healthcare to labor to telecommunications. This paper reinterprets the variables in the basic supply–demand model so that both product-definition and quantity are equilibrium outcomes. Specifically, compliance with price controls is achieved by altering the production-factor mix along the supply chain. This approach yields surprising insights into the incidence of price regulations and their effects on the amount of trade. Furthermore, it reveals how many of the short-run effects of price controls can be opposite of what they are in the long run. The supply-chain framework also easily represents business-to-business price controls, which have been more prevalent in policy practice than price-theoretic analysis.

We consider a standard dynamic pricing problem with finite inventories, finite selling horizon, and stochastic demands, where the objective of the seller is to maximize total expected revenue. We introduce a simple improvement of the popular static price control known in the literature. The proposed heuristic only requires a single optimization at the beginning of the selling horizon and does not require any reoptimization at all. This provides an advantage over the potentially heavy computational burden of reoptimization, especially for very large applications with frequent price adjustments. In addition, our heuristic can be implemented in combination with a few reoptimizations to achieve a high-level revenue performance. This hybrid of real-time adjustment and reoptimization allows the seller to enjoy the benefit of reoptimization without overdoing it.

Pakistan faces the highest global prevalence of diabetes and has recently implemented a price deregulation policy for medicines not listed on the National Essential Medicines List (NEML). Pakistan's NEML 2023 is a direct adoption of the 23rd WHO Model EML rather than a country-specific prioritization; nonetheless, it has been used to identify medicines for exemption from price controls. This study evaluated the effect of the price deregulation policy on insulin access in Pakistan. We surveyed 30 retail pharmacies across six regions using an adapted WHO/HAI approach. Post-deregulation data on consumer prices and availability were collected. Pre-deregulation prices were extracted from published sources. The insulin prices were standardized to 10 ml at 100 IU/ml. Difference-in-Differences (DiD) analysis was used to compare price changes between non-NEML insulins (treatment group) and NEML-listed insulins (control group), with each insulin product serving as the unit of analysis. The percentage of available insulin products and their affordability for the lowest-paid worker were calculated. Non-parametric tests were performed for categorical analyses. Overall, the median price of insulins increased by 31.87% (p < 0.001) i.e., from PKR 2030 (7.3 USD) to PKR 2678 (9.6 USD), after deregulation, except for short-acting human biosimilar (BS) insulins that stayed stable. As per the DiD-interaction term, prices of non-NEML insulins increased by 4.1 USD (p < 0.001) more than NEML insulins after deregulation. The median number of days' wages for the lowest-paid worker increased from 1.90 days before deregulation to 2.51 days after, to obtain a month's insulin supply. All surveyed outlets had at least one insulin product available. Originator brands (OB) had higher availability than BS, with 78.0% of human and 48.8% of analogue insulins available as OBs, compared to 51.1% and only 8.3% as BS insulins, respectively. Insulin prices increased significantly following the deregulation policy, particularly for non-NEML OBs, leading to reduced affordability despite fair availability. A policy review and stronger financial protection measures are needed to ensure equitable access to insulin.

In this essay, I argue that the explosion of inflation during the Salvador Allende administration in Chile (above 1,500% on a six-month annualized measure) was predictable. The government's use of massive and strict price controls generated acute macroeconomic imbalances. I postulate that the combination of runaway inflation, shortages, and black markets generated major hostility among the middle class and that that unhappiness reduced the support for the Unidad Popular government.

This paper has two primary objectives. First, it contributes to the literature on oil stabilisation funds and price controls by examining how such a fund is used to regulate market prices in the developing country of Vietnam. Second, it employs descriptive statistics and a standard GARCH methodology to investigate whether the fund, which operates as a form of price control, can effectively reduce domestic price volatility. The results show that the oil price stabilisation fund failed to achieve its intended goal. Considering the administrative costs and other negative impacts associated with the fund, a more market‐ oriented approach, potentially combined with a price‐elastic tax system, is recommended for determining domestic oil prices.

The term ‘biosimilar’ refers to an alternative similar version of an off-patent innovative originator biotechnology product (the ‘reference product’). Several biosimilars have been approved in Europe, and a number of top-selling biological medicines have lost, or will lose, patent protection over the next 5 years. We look at the experience in Europe so far. The USA has finally implemented a regulatory route for biosimilar approval. We recommend that European and US governments and payers take a strategic approach to get value for money from the use of biosimilars by (1) supporting and incentivising generation of high-quality comprehensive outcomes data on the effectiveness and safety of biosimilars and originator products; and (2) ensuring that incentives are in place for budget holders to benefit from price competition. This may create greater willingness on the part of budget holders and clinicians to use biosimilar and originator products with comparable outcomes interchangeably, and may drive down prices. Other options, such as direct price cuts for originator products or substitution rules without outcomes data, are likely to discourage biosimilar entry. With such approaches, governments may achieve a one-off cut in originator prices but may put at risk the creation of a more competitive market that would, in time, produce much greater savings. It was the creation of competitive markets for chemical generic drugs—notably, in the USA, the UK and Germany—rather than price control, that enabled payers to achieve the high discounts now taken for granted.

Prices of gas and electricity in the world had increased because of high demand after the COVID episode and little supply growth following a period of lower investment. Now, some European national governments have instituted new price ceilings on gas and electricity purchased by households and small and medium businesses. After meeting on Oct 20-21, the Council of the European Union formally called for an EU effort to cap the price of gas, including a lower cap on its price in electricity generation, and a possible common cartel agreement to pay lower prices for wholesale gas purchased from producers in foreign countries. Here, Lemieux examines the economic effects of price caps.

This study examines price transmission dynamics in the Hungarian pork market from 2017 to 2023, focusing on the effects of price controls implemented to combat inflation. Inflation and price control policies have been central topics in economic research due to their significant impacts on market behavior and consumer welfare. Utilizing linear and nonlinear cointegration approaches, we explore how these regulatory interventions influence producer and consumer price relationships. Our findings reveal persistent asymmetry in long-term price transmission, with producer price increases having a greater impact on consumer prices than decreases, highlighting delayed and partial adjustments to price fluctuations. Short-term dynamics, however, show no such asymmetry. Additionally, our analysis indicates that price pressures originate primarily from the consumer side, as consumer prices have a causal effect on producer prices. These results provide novel insights into the role of regulatory measures, like price controls, in shaping market dynamics under inflationary pressures.

In this paper, we investigate the combined effect of carbon policies and price controls in cross-border trade of electricity on power generation investments. It has been shown that price controls in cross-border trade of electricity may negatively affect renewable energy investments. However, the assessment of the impact of the simultaneous adoption of carbon policies and energy price controls has still not been addressed. Assessing this interaction is important to find out whether carbon policies can offset the negative impact of price controls on renewable energy investments or not. Results show that carbon policies can partially offset the negative impact of price controls, and that cap-and-trade programs are more effective to prevent this negative impact than carbon taxes. On the other hand, high levels of carbon taxes combined with price control regulation may increase renewable capacity investments, but without completely offsetting the negative effect of the price controls.

In this paper, we study price competition for an oligopoly in a dynamic setting, where each of the sellers has a fixed number of units available for sale over a fixed number of periods. Demand is stochastic, and depending on how it evolves, sellers may change their prices at any time. This reflects the fact that firms constantly, and almost costlessly, change their prices, reacting to updates in their estimates of market demand, competitor prices, or inventory levels. In a setting with demand uncertainty, we show that there is a unique subgame-perfect equilibrium for a duopoly, in which all states sellers engage in Bertrand competition and the seller with the lower equilibrium reservation value sells a unit at a price equal to the competitor's equilibrium reservation value. This structure therefore extends the marginal-value concept of bid-price control, used in many revenue management implementations, to a competitive model. We give a closed-form solution to the equilibrium price paths for a duopoly and extend all the results to an n -firm oligopoly. We then study extensions to multiple customer types, uncertain valuations, and differentiated products. This paper was accepted by Martin Lariviere, operations management.