This paper examines how over-the-counter drug labels influence consumer perceptions of efficacy, distort decision-making, and shape equilibrium outcomes under counterfactual regulatory scenarios. It addresses a key identification challenge—the unobservability of perceived efficacy under different information structures—by conducting a randomized controlled trial and integrating its findings into a structural model. Using data from a control group and three treatment arms, I construct product-level measures of perceived efficacy beliefs based on pairwise product comparisons. Leveraging control group data supplemented with NielsenIQ data, I estimate a structural demand model that isolates the role of efficacy beliefs while accounting for heterogeneous preferences. I then incorporate updated beliefs to assess equilibrium effects under each information treatment. In equilibrium, the most effective intervention—emphasizing equivalent efficacy—increases substitution between biologically equivalent products by 26\%, reduces consumer spending by 12\%, but also introduces second-degree price discrimination driven by symptom-label preferences.
No one can remain neutral regarding health information about their conditions. While some focus on the worst-case scenario, others seek justifications for not visiting the doctor. The complexity and diversity of current online health information …
This paper shows that in regulated healthcare markets, delayed reimbursement can improve hospital technology adoption by acting as a screening device. We study transcatheter aortic valve replacement (TAVR) from 2010–2020 and show that 20\% of eventual adopters entered when per-case margins were negative, largely because TAVR served as a quality signal that attracted patients across hospital boundaries. A hospital-choice model shows that adoption reduced travel disutility by 22\%, making patients willing to travel 29\% farther to reach an adopting hospital. Early adoption therefore reveals low-cost hospitals, while non-adoption identifies financially constrained ones. In a dynamic adoption model, delayed reimbursement combined with targeted subsidies to these constrained hospitals outperforms immediate uniform reimbursement, making delay an informational instrument rather than merely a friction.
This paper discuss theoretically and empirically second degree price discrimination under the condition when companies use pricing strategies to prevent consumers form learning about equivalence in quality.