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The economic dynamics of antibiotic efficacy under open access

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  • Herrmann, Markus
  • Gaudet, Gérard

Abstract

We analyze the exploitation of an antibiotic in a market subject to open access on the part of antibiotic producers to the common pool of antibiotic efficacy. While the market equilibrium depends only on current levels of antibiotic efficacy and infection of the epidemiological system, the social optimum accounts for the dynamic externalities which relate those levels to the intertemporal use being made of the antibiotic. We show that depending on the parameters of the model, in particular the cost of production and the improvement in the recovery rate that results from antibiotic treatment, the positive steady-state level of antibiotic efficacy to which the system tends under open access can be lower or higher than the level which should prevail in the socially optimal steady state. In fact there are parameter configurations for which the steady states can be exactly the same. However, the paths leading to the steady state always differ.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 57 (2009)
Issue (Month): 3 (May)
Pages: 334-350

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Handle: RePEc:eee:jeeman:v:57:y:2009:i:3:p:334-350

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Web page: http://www.elsevier.com/locate/inca/622870

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Keywords: Economics of antibiotic resistance Antibiotic efficacy Renewable resource Open-access equilibrium Social optimum;

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References

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  1. Gardner Brown & Ramanan Laxminarayan, 1998. "Economics of Antibiotic Resistance," Discussion Papers in Economics at the University of Washington 0060, Department of Economics at the University of Washington.
  2. Laxminarayan, Ramanan & Brown, Gardner, 2000. "Economics of Antibiotic Resistance: A Theory of Optimal Use," Discussion Papers dp-00-36, Resources For the Future.
  3. Tisdell, Clem, 1982. "Exploitation of Techniques That Decline in Effectiveness with Use," Public Finance = Finances publiques, , vol. 37(3), pages 428-37.
  4. Brown, Gardner & Layton, David F., 1996. "Resistance economics: social cost and the evolution of antibiotic resistance," Environment and Development Economics, Cambridge University Press, vol. 1(03), pages 349-355, July.
  5. Gersovitz, Mark & Hammer, Jeffrey S., 2001. "The economic control of infectious diseases," Policy Research Working Paper Series 2607, The World Bank.
  6. Elamin H. Elbasha, 2003. "Deadweight loss of bacterial resistance due to overtreatment," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 125-138.
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Cited by:
  1. M. Filippini & G. Masiero, 2012. "An empirical analysis of habit and addiction to antibiotics," Empirical Economics, Springer, vol. 42(2), pages 471-486, April.
  2. Herrmann, Markus & Nkuiya, Bruno & Dussault, Anne-Renée, 2013. "Innovation and antibiotic use within antibiotic classes: Market incentives and economic instruments," Resource and Energy Economics, Elsevier, vol. 35(4), pages 582-598.
  3. Massimo Filippini & Laura González & Giuliano Masiero, 2010. "Estimating dynamic consumption of antibiotics using panel data: the shadow effect of bacterial resistance," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1011, USI Università della Svizzera italiana.
  4. Anderson, Soren T. & Laxminarayan, Ramanan & Salant, Stephen W., 2012. "Diversify or focus? Spending to combat infectious diseases when budgets are tight," Journal of Health Economics, Elsevier, vol. 31(4), pages 658-675.
  5. Markus Herrmann, 2009. "Monopoly Pricing of an Antibiotic Subject to Bacterial Resistance," Cahiers de recherche 0946, CIRPEE.
  6. Herrmann, Markus & Nkuiya, Bruno & Dussault, Anne-Renée, 2013. "Innovation and Antibiotic Use within Antibiotic Classes: Market Incentives and Economic Instruments," Working Papers 149731, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
  7. Herrmann, Markus, 2010. "Monopoly pricing of an antibiotic subject to bacterial resistance," Journal of Health Economics, Elsevier, vol. 29(1), pages 137-150, January.

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