We study the impact of regulating product entry and quality information requirements on an oligopoly equilibrium and consumer welfare. Product testing can reduce consumer uncertainty, but also increase entry costs and delay entry. Using variation between EU and US medical device regulations, we document patterns consistent with valuable learning from more stringent US requirements. To derive welfare implications, we pair the data with a model of supply, demand, and testing regulation. US policy is indistinguishable from the policy that maximizes total surplus in our estimated model, while the European Union could benefit from more testing. “Post-market surveillance” could further increase surplus.

Using data on hospitals’ purchases across a large number of important product categories, we find that access to information on purchasing by peer hospitals leads to reductions in the prices hospitals negotiate for supplies. These effects are concentrated among hospitals previously paying relatively high prices for brands purchased in large volumes. Evidence from coronary stents suggests that transparency allows hospitals to resolve asymmetric information problems, but savings are limited in part by the stickiness of contracts in business-to-business settings. Savings are largest for physician preference items, where high-price, high-quantity hospital-brand combinations average 3.9% savings, versus 1.6% for commodities.