Are better vaccines really better? The case of a simple stochastic epidemic SIR model
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.
Volume (Year): 33 (2013)
Issue (Month): 1 ()
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- 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).
- 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.
- Rikard Forslid & Mathias Herzing, 2015.
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- 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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