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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)

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    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.

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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 33 (2013)
    Issue (Month): 1 ()
    Pages: 207-216

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    Handle: RePEc:ebl:ecbull:eb-13-00021
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    1. Kessing, Sebastian & Nuscheler, Robert, 2003. "Monopoly pricing with negative network effects: the case of vaccines
      [Monopolpreisbildung mit negativen Netzwerkeffekten am Beispiel von Impfstoffen]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2003-06, Social Science Research Center Berlin (WZB).
    2. Forslid, Rikard & Herzing, Mathias, 2008. "On the Optimal Production Capacity for Influenza Vaccine," CEPR Discussion Papers 6808, C.E.P.R. Discussion Papers.
    3. Xu, Xiaopeng, 1999. "Technological improvements in vaccine efficacy and individual incentive to vaccinate," Economics Letters, Elsevier, vol. 65(3), pages 359-364, December.
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