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Irreversible Decision Making in Contagious Animal Disease Control under Uncertainty: An Illustration Using FMD in Brittany

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  • Mahul, Olivier
  • Gohin, Alexandre

Abstract

The concept of irreversible investment is applied to highly contagious animal disease control when uncertainty about the spread of the disease is resolved over time. In comparison with the strategy of destroying infected herds, the vaccination programme causes additional losses that cannot be recovered. These sunk costs are thus irreversible. Therefore, the gain from waiting for new information, namely the quasi-option value, should induce animal health authorities to delay the decision to vaccinate if the probability of a widespread epidemic is not too high. A numerical example is developed for foot and mouth disease (FMD) in Brittany. Copyright 1999 by Oxford University Press.

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Bibliographic Info

Article provided by Foundation for the European Review of Agricultural Economics in its journal European Review of Agricultural Economics.

Volume (Year): 26 (1999)
Issue (Month): 1 (March)
Pages: 39-58

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Handle: RePEc:oup:erevae:v:26:y:1999:i:1:p:39-58

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Cited by:
  1. Hennessy, David A., 2005. "Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals," Staff General Research Papers 12489, Iowa State University, Department of Economics.
  2. Mangen, M. -J. J. & Burrell, A. M. & Mourits, M. C. M., 2004. "Epidemiological and economic modelling of classical swine fever: application to the 1997/1998 Dutch epidemic," Agricultural Systems, Elsevier, vol. 81(1), pages 37-54, July.
  3. Fenichel, Eli P. & Horan, Richard D. & Wolf, Christopher A., 2004. "The Role Of Sexual Dimorphism In The Economics Of Wildlife Disease Management," 2004 Annual meeting, August 1-4, Denver, CO 20395, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Gramig, Benjamin M. & Horan, Richard D. & Wolf, Christopher A., 2005. "A Model of Incentive Compatibility under Moral Hazard in Livestock Disease Outbreak Response," 2005 Annual meeting, July 24-27, Providence, RI 19200, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. David A. Hennessy & Tong Wang, 2013. "Strategic Interactions Among Private and Public Efforts when Preventing and Stamping Out an Highly Infectious Animal Disease," Center for Agricultural and Rural Development (CARD) Publications 13-wp541, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  6. Arnaud Rault & St├ęphane Krebs, 2011. "Catastrophic risk and risk management, what do we know about livestock epidemics? State of the art and prospects," Working Papers SMART - LERECO 201105, INRA UMR SMART.
  7. Kohne, Manfred, 2001. "Perspektiven der landwirtschaftlichen Betriebslehre," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 50(4).
  8. Kobayashi, Mimako & Melkonyan, Tigran A., 2011. "Strategic Incentives in Biosecurity Actions: Theoretical and Empirical Analyses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), August.
  9. Horan, Richard D. & Wolf, Christopher A., 2003. "The Economics Of Managing Wildlife Disease," 2003 Annual meeting, July 27-30, Montreal, Canada 22224, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Gramig, Benjamin M. & Horan, Richard D. & Wolf, Christopher A., 2008. "Livestock Disease Indemnity Design When Moral Hazard is Followed by Adverse Selection," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6542, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. Horan, Richard D. & Wolf, Christopher A. & Fenichel, Eli P. & Mathews, Kenneth H., Jr., 2004. "Controlling Wildlife And Livestock Disease With Endogenous On-Farm Biosecurity," 2004 Annual meeting, August 1-4, Denver, CO 20349, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  12. Rault, Arnaud & Krebs, Stephane, 2011. "Livestock epidemics and catastrophic risk management: State of the art and prospects on economic dynamics," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114793, European Association of Agricultural Economists.

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