Modeling price regulation in pharmaceutical supply chains under panic buying during public health emergencies

In recent years, the frequent occurrence of public health emergencies has underscored the importance of safeguarding social stability and public welfare. Consumer panic buying, as a typical behavioral response during such emergencies, can disrupt pharmaceutical supply chains, leading to reduced welfare and increased resource wastage. This study develops a two-stage model to characterize the behavioral mechanism of panic buying and systematically compares four types of price regulation — manufacturer absolute regulation (MA), retailer absolute regulation at the level (RA), manufacturer relative regulation (MR), and retailer relative regulation (RR) — under risk-dominant and cost-dominant scenarios. The results indicate that under risk-dominant scenario, price regulation effectively reduces resource wastage; whereas under cost-dominant scenario, overly loose price caps may exacerbate it. In terms of supply chain profits, MA, MR, and RR cases preserve overall profitability under risk-dominant scenario, but eliminates the potential for Pareto improvement. The RA case becomes ineffective due to its insufficient price adjustment, which fails to sustain panic-driven demand. Under cost-dominant scenario, moderate regulation under MA, MR, and RR cases enables win–win outcomes across upstream and downstream actors, while RA case compresses retailer incentives and weakens overall coordination. A case study based on India’s pharmaceutical pricing practices further validates the model’s applicability and examine social welfare outcomes. Interestingly, we found that regulating the upstream supplier consistently results in greater improvements in social welfare than directly regulating retailers. The findings offer theoretical and practical insights for designing pricing regulations under public health emergencies.