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Managing dynamic epidemiological risks through trade

Author

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  • Horan, Richard D.
  • Fenichel, Eli P.
  • Finnoff, David
  • Wolf, Christopher A.

Abstract

There is growing concern that trade, by connecting geographically isolated regions, unintentionally facilitates the spread of invasive pathogens and pests – forms of biological pollution that pose significant risks to ecosystem and human health. We use a bioeconomic framework to examine whether trade always increases private risks, focusing specifically on pathogen risks from live animal trade. When the pathogens have already established and traders bear some private risk, we find two results that run counter to the conventional wisdom on trade. First, uncertainty about the disease status of individual animals held in inventory may increase the incentives to trade relative to the disease-free case. Second, trade may facilitate reduced long-run disease prevalence among buyers. These results arise because disease risks are endogenous due to dynamic feedback processes involving valuable inventories, and markets facilitate the management of private risks that producers face with or without trade.

Suggested Citation

  • Horan, Richard D. & Fenichel, Eli P. & Finnoff, David & Wolf, Christopher A., 2015. "Managing dynamic epidemiological risks through trade," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 192-207.
  • Handle: RePEc:eee:dyncon:v:53:y:2015:i:c:p:192-207
    DOI: 10.1016/j.jedc.2015.02.005
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    References listed on IDEAS

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    Cited by:

    1. Bate, Andrew M. & Jones, Glyn & Kleczkowski, Adam & MacLeod, Alan & Naylor, Rebecca & Timmis, Jon & Touza, Julia & White, Piran C.L., 2016. "Modelling the impact and control of an infectious disease in a plant nursery with infected plant material inputs," Ecological Modelling, Elsevier, vol. 334(C), pages 27-43.

    More about this item

    Keywords

    Bioeconomics; Arbitrage; Infectious disease; Joint determination; Thresholds;

    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • I19 - Health, Education, and Welfare - - Health - - - Other

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