Open Access to the Resource of Antibiotic Treatment Efficacy Subject to Bacterial Resistance
AbstractIn this paper, we are interested in how a pharmaceutical industry manages existing antibiotic drugs in the context of bacterial resistance. We consider a model based on an epidemiological framework where antibiotic recovery rates, and thus intrinsic qualities, may differ. Antibiotic efficacy is modeled as a common pool of a non-renewable resource to which antibiotic producers have open access. The paper derives antibiotic demands within a vertical differentiation model and characterizes the dynamics of infected individuals, antibiotic efficacy and treatment rates under the open-access and the socially optimal allocation. We show that the high-quality antibiotic drug loses its comparative advantage over time under both allocations, such that the low-quality drug should be used longer. This occurs at a later point of time in the social optimum and allows for a better control of infection in the longer run. In contrast with the ambiguous outcome reported in the literature, the socially optimal steady-state level of antibiotic efficacy is lower than that of the open-access allocation. We also extend our analysis to a strategic, duopolistic context.
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Bibliographic InfoPaper provided by CREATE in its series Cahiers de recherche CREATE with number 2013-2.
Date of creation: 2013
Date of revision:
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Antibiotic management; Non-renewable resource; Open access; Social optimum; Public health;
Other versions of this item:
- Nkuiya, Bruno & Herrmann, Markus, 2013. "Open Access to the Resource of Antibiotic Treatment Efficacy Subject to Bacterial Resistance," Working Papers 144306, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-09 (All new papers)
- NEP-COM-2013-03-09 (Industrial Competition)
- NEP-ENV-2013-03-09 (Environmental Economics)
- NEP-HEA-2013-03-09 (Health Economics)
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