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Home | Events | Price Controls with Imperfect Competition and Choice Frictions: Evidence from Indian Pharmaceuticals
Seminar

Price Controls with Imperfect Competition and Choice Frictions: Evidence from Indian Pharmaceuticals

  • Series
    Health and Labor Seminars
  • Speaker(s)
    Harsh Gupta (London School of Economics, United Kingdom)
  • Field
    Empirical Microeconomics
  • Location
    Erasmus University Rotterdam, Campus Woudestein, Langeveld 4.02
    Rotterdam
  • Date and time

    April 16, 2026
    12:00 - 13:00

Abstract

We analyse how common market failures---market power and choice frictions---shape the welfare effects of a large-scale pharmaceutical price control policy in India. The policy reduced regulated product prices by 24% and increased sales by 36%, with little impact on entry and exit. Standard welfare analysis shows significant consumer and social welfare gains, as price caps correct monopoly distortions. However, using a survey of doctors' drug choices, we show that consumers overvalue regulated products, implying 30% lower true consumer surplus gains and a decline in social welfare. We assess alternative price and non-price regulations that address both market failures.