Market Structure and Communicable Diseases
AbstractCommunicable diseases pose a formidable challenge for public policy. Using numerical simulations, we show under which scenarios a monopolist’s price and prevalence paths converge to a nonzero steady-state. In contrast, a planner typically eradicates the disease. If eradication is impossible, the planner subsidizes treatments as long as the prevalence can be controlled. Drug resistance exacerbates the welfare difference between monopoly and first best outcomes. Nevertheless, because the negative externalities from resistance compete with the positive externalities of treatment, a mixed competition/monopoly regime may perform better than competition alone. This result has important implications for the design of many drug patents.
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Bibliographic InfoPaper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-241.
Length: 37 pages
Date of creation: 27 Jun 2005
Date of revision:
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communicable disease; resistance; epidemiology; patent;
Other versions of this item:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-09 (All new papers)
- NEP-CMP-2006-07-09 (Computational Economics)
- NEP-COM-2006-07-09 (Industrial Competition)
- NEP-HEA-2006-07-09 (Health Economics)
- NEP-MIC-2006-07-09 (Microeconomics)
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