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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.

As the demands of some important products such as oil, gas, and agricultural commodities are disrupted, the government often regulates the retail price that includes impositions of a price ceiling and a price floor. In this paper, we analyze the coordination of a supply chain with a dominate retailer under the government price regulation policy by a revenue sharing contract after demand disruption. First, we characterize the optimal decisions of the supply chain under normal circumstance by the revenue sharing contract as a benchmark. Then, when the demand is disrupted, we redesign the contract to coordinate the supply chain and obtain the corresponding revenue sharing contract in different scenarios. Finally, we give some numerical examples to illustrate our theoretical results and explore the impacts of government price regulations on the coordination mechanism.

China adopted a market-based pricing mechanism for petroleum products to improve the economic efficiency of resource allocation, thereby exposing its macroeconomy to higher shocks in world crude oil price volatility. To address the WCOP volatility, the price of petroleum products is subject to government regulations. However, the macroeconomic effects of PPP regulations are yet to be studied thoroughly. Accordingly, this study first quantifies the degree of PPP regulation using a “profit + cost” model, followed by the filtration of the macroeconomic impacts of fiscal and monetary policies and then analyzes the economic effects of PPP using an SVAR model. Furthermore, a counterfactual analysis is conducted to verify the results. It was found that PPP regulation could alleviate the shock of WCOP volatility on industrial value-added, finished fixed asset investment, and the producer price index. These findings provide a deeper understanding of the macroeconomic effects of PPP regulations and provide policymakers with new information on the necessity of PPP regulations.

BackgroundIn October 2012, the Chinese government established maximum retail prices for specific products, including 30 antineoplastic medications. Three years later, in June 2015, the government abolished price regulation for most medications, including all antineoplastic medications. This study examined the impacts of regulation and subsequent deregulation of prices of antineoplastic medications in China.MethodsUsing hospital procurement data and an interrupted time series with comparison series design, we examined the impacts of the policy changes on relative purchase prices (Laspeyres price index) and volumes of and spending on 52 antineoplastic medications in 699 hospitals. We identified three policy periods: prior to the initial price regulation (October 2011 to September 2012); during price regulation (October 2012 to June 2015); and after price deregulation (July 2015 to June 2016).ResultsDuring government price regulation, compared with price-unregulated cancer medications (n=22, mostly newer targeted products), the relative price of price-regulated medications (n=30, mostly chemotherapeutic products) decreased significantly (β=−0.081, p<0.001). After the government price deregulation, no significant price change occurred. Neither government price regulation nor deregulation had a significant impact on average volumes of or average spending on all antineoplastic medications immediately after the policy changes or in the longer term (p>0.05).ConclusionCompared with unregulated antineoplastics, the prices of regulated antineoplastic medications decreased after setting price caps and did not increase after deregulation. To control the rapid growth of oncology medication expenditures, more effective measures than price regulation through price caps for traditional chemotherapy are needed.

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.

Background In India, due to a lack of population-level financial risk protection mechanisms, the expenditure on healthcare is primarily out-of-pocket in nature. Through Drug Price Control Orders (DPCOs), the Indian Government attempts to keep medicine prices under check. The aim of this study was to measure the potential impact of DPCO 2013 on the utilization of antibiotics under price regulation in India using large nationally representative pharmaceutical sales data. Methods We used interrupted time series analysis, a quasi-experimental research design to estimate the impact of DPCO 2013 on the utilization of antibiotics in the private sector in India. Indian pharmaceutical sales data set, PharmaTrac from a market research company—All Indian Origin Chemists and Distributors Limited—was used for the study. The data are collected from a panel of around 18,000 stockists across 23 different regions of the country. The primary outcome measure is the percentage change (increase or decrease) in the sales volume of the antibiotics under DPCO 2013, measured in standard units (SUs). Results Our estimates suggest that post-intervention (after notification of DPCO 2013) there was an immediate reduction (level change) in the sales of antibiotics under DPCO 2013 by 3.7% ( P  > 0.05), followed by a sustained decline (trend change) of 0.3% ( P  > 0.05) as compared to the pre-intervention trend at the molecule level, but both changes were statistically insignificant. However, in terms of ‘average monthly market share,’ the DPCO 2013 notification resulted in a sharp reduction of 579% ( P  < 0.05) (level change) followed by a sustained increase of 9.5% ( P  > 0.05) (trend change) in the ‘market share of antibiotics under DPCO’ as compared to pre-intervention trend. Conclusions The impact of DPCO 2013 in terms of the overall increase in the utilization of antibiotics under price regulation was limited but there was a switch from non-price controlled antibiotics to price regulated antibiotics (notified under DPCO 2013). We argue that policies on price control need to be complemented with continuous monitoring of market behavior to have a measurable and long-term impact.

The policy debate about price, value, and innovation in pharmaceuticals is at a critical stage for the NHS. Claxton and colleagues describe the key principles of value based pricing and consider some of the concerns about such a scheme

This paper finds that the use of price controls has a statistically and quantitatively important effect on the extent and timing of the launch of new drugs. Firms headquartered in countries that regulate price reach fewer markets than those in countries without price controls. Companies avoid price-controlled markets, and are less likely to introduce products in additional markets after entering a price-controlled country. Launches into low-price European countries are further delayed following legalization of parallel imports. The results suggest that price regulation in one country affects entry into other countries, and may affect the strategies of domestic firms.

Congestion has become one of the most important factors leading to patient dissatisfaction and doctor-patient conflicts in the medical market of China. In this study, we explore the causes and effects of structural congestion in the Chinese medical market from an incentive structure perspective. Our analysis reveals that prior medical system reforms with price regulation in China have induced hospitals to establish incentives for capital-intensive investments, while ignoring human capital, and have driven medical staff and patients to higher-level hospitals, reinforcing an incentive structure in which congestion in higher-level hospitals and idle resources in lower-level hospitals coexist. The existing incentive structure has led to cost increases and degradation of human capital and specific factor effects. Recent reforms to reduce congestion in the Chinese medical market were not effective. Most of them had no impact on and did not involve the existing distorted incentive structure. Future reforms should consider rebalancing expectations for medical quality, free flow of human capital and price regulation reforms to rebuild a new incentive structure. La congestion est devenue l’un des plus importants facteurs d’insatisfaction des patients et de conflits entre médecins et patients sur le marché médical en Chine. Dans la présente étude, nous examinons les causes et les effets de la congestion structurelle du marché médical chinois du point de vue de la structure des mesures incitatives. Notre analyse révèle que les réformes préalables du système médical associées à une réglementation des prix en Chine, ont amené les hôpitaux à mettre en place des mesures incitatives pour les investissements à haute intensité de capital, tout en ignorant le capital humain; cette situation a poussé le personnel médical et les patients à rechercher des hôpitaux de niveau supérieur, renforçant ainsi la structure des mesures incitatives entraînant la congestion dans les hôpitaux de niveau supérieur tandis que les ressources des hôpitaux de niveau inférieur demeurent inutilisées. La structure des mesures incitatives existantes a induit un accroissement des coûts et la dégradation du capital humain et des incidences des facteurs spécifiques. Les récentes réformes visant à réduire la congestion sur le marché médical chinois ne sont pas efficaces. La plupart d’entre elles n’ont eu aucune incidence et ne s’intéressent pas à l’actuelle structure de mesures incitatives contrefaites. Les futures réformes devraient envisager un rééquilibrage des attentes du point de vue de la qualité médicale, de la libre circulation du capital humain et des réformes de la réglementation des prix afin de mettre en place une nouvelle structure de mesures incitatives. 在中国的医疗市场, 拥挤是造成病人不满和医患冲突的最重要 的因素之一。本文中, 我们从激励结构的视角探索中国医疗市 场结构性拥挤的原因和影响。我们的分析表明, 之前带有价格 管控的医疗系统改革引导医院进行资本密集型的投资, 忽视人 力资本, 导致医护人员和病人向更高级别的医院流动, 使高级 别医院变得更加拥挤, 同时低级别医院的资源被闲置。现有的 激励结构导致成本上升, 人力资本降级及特别因素影响。最近 实施的一些减少中国医疗市场的拥挤改革没有效果。大多数 改革没有产生影响, 并没有考虑到现存结构中的扭曲。未来的 改革应该考虑到对医疗质量的期待和人力资源的自由流动的 再平衡, 用价格管控改革新建一个激励结构。 La congestión se ha convertido en uno de los factores más importantes que conducen a la insatisfacción y los conflictos entre médicos y pacientes en el mercado médico de China. En este estudio, exploramos las causas y efectos de la congestión estructural en el mercado médico chino desde una perspectiva de estructura de incentivos. Nuestro análisis revela que las reformas anteriores del sistema médico con la regulación de precios en China han inducido a los hospitales a establecer incentivos para las inversiones de capital intensivo, sin tener en cuenta el capital humano, y han conducido al personal médico y a los pacientes a los hospitales de más alto nivel, reforzando una estructura de incentivos en el cual la congestión en estos hospitales de más alto nivel y los recursos ociosos en los hospitales de nivel inferior coexisten. La estructura de incentivos existente ha dado lugar a aumentos de costos, a la degradación del capital humano y a los efectos de factores específicos. Las recientes reformas para reducir la congestión en el mercado médico chino no fueron efectivas. La mayoría de ellas no tuvo impacto y no involucró la estructura de incentivos distorsionada existente. Las reformas futuras deberían considerar el reequilibrio de las expectativas de la calidad médica, el libre flujo de capital humano y las reformas de la regulación de precios para reconstruir una nueva estructura de incentivos.

Price controls lead to misallocation of goods and encourage rent seeking. The misallocation effect alone ensures that a price control always reduces consumer surplus in an otherwise-competitive market with convex demand if supply is more elastic than demand or with log-convex demand (e.g., constant elasticity) even if supply is inelastic. The same results apply whether rationed goods are allocated by costless lottery or whether costly rent seeking and/or partial decontrol mitigates the inefficiency. Our analysis exploits the observation that inanymarket, consumer surplus equals the area between the demand curve and the industry marginal revenue curve.