State-championed or private low-end disruption! Who will win this horse race in steady state?

Abstract

In a research project, we investigated the rise of a private low-end firm and studied its effects on competition in the Indian pharmaceutical markets. A peer reviewer commented in a journal, “This is an interesting horse race, where an entrepreneur is offering lower prices, instead of the state offering price controls. The question becomes then if that strategy is going to be sustainable in the long run.” We pondered whether that was ever going to be testable. But as we close an eventful 2016, we have reminders once again with two examples of how the state, unlike a private firm, can disrupt the market from the low-end, offering new vignettes on competition.

At one end is Fidel Castro who reformed how education and healthcare in Cuba under the ambit of the state could enhance welfare for the lessprivileged in society. Closer home, J Jayalalithaa continued her experiments with a model of governance disrupting the market with low-end state-provided services and products. Read more at: https://economictimes.indiatimes.com/blogs/et-commentary/state-championed-or-private-low-end-disruption-who-will-win-this-horse-race-in-steady-state/