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Are better vaccines really better? The case of a simple stochastic epidemic SIR model


  • Nicolas Houy

    () (Université de Lyon, Lyon, F-69007, France; CNRS, GATE Lyon Saint-Etienne, Ecully, F-69130, France)


We consider a model of vaccine market where the buyer is centralized and shows an endogenous demand function based on a simple stochastic SIR model. When the seller is a monopoly, we show that better vaccines (in the sense of greater efficiency or inducing less side-effects) do not imply greater total surplus, greater buyer surplus or even greater profits. Since we consider a centralized buyer, our results cannot be caused by the well-known epidemiological externality of vaccination.

Suggested Citation

  • Nicolas Houy, 2013. "Are better vaccines really better? The case of a simple stochastic epidemic SIR model," Economics Bulletin, AccessEcon, vol. 33(1), pages 207-216.
  • Handle: RePEc:ebl:ecbull:eb-13-00021

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    References listed on IDEAS

    1. Rikard Forslid & Mathias Herzing, 2015. "On the Optimal Production Capacity for Influenza Vaccine," Health Economics, John Wiley & Sons, Ltd., vol. 24(6), pages 726-741, June.
    2. Xu, Xiaopeng, 1999. "Technological improvements in vaccine efficacy and individual incentive to vaccinate," Economics Letters, Elsevier, vol. 65(3), pages 359-364, December.
    3. Kessing, Sebastian G. & Nuscheler, Robert, 2006. "Monopoly pricing with negative network effects: The case of vaccines," European Economic Review, Elsevier, vol. 50(4), pages 1061-1069, May.
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    Cited by:

    1. Sabine Liebenehm & Bernard Bett & Cristobal Verdugo & Mohamed Said, 2016. "Optimal Drug Control under Risk of Drug Resistance – The Case of African Animal Trypanosomosis," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 510-533, June.

    More about this item


    Vaccines; Market structure; Monopoly; Epidemiology; SIR model.;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health


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