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Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals

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  • David A. Hennessy

Abstract

The article develops a dynamic capital valuation model in which farms can act with farm-varying cost to increase the probability of avoiding an infectious endemic animal disease. Multiple endemic disease equilibria can exist, and the one with the largest set of action takers is socially optimal. Costly capital markets are shown to be a factor in determining the extent of disease. Frictions, such as dealing with a veterinary public health bureaucracy, can enhance social welfare by encouraging precautionary biosecurity actions. Technical innovations can reduce social welfare, and a disease indemnification scheme is also studied. Suggestions for empirical implementation are provided. Copyright 2007, Oxford University Press.

Suggested Citation

  • David A. Hennessy, 2007. "Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 698-711.
  • Handle: RePEc:oup:ajagec:v:89:y:2007:i:3:p:698-711
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01001.x
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    10. Michael Kremer, 1996. "Integrating Behavioral Choice into Epidemiological Models of AIDS," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 549-573.
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    16. David A. Hennessy, 2005. "Biosecurity and Infectious Animal Disease," Center for Agricultural and Rural Development (CARD) Publications 05-wp413, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Benjamin M. Gramig & Richard D. Horan, 2011. "Jointly determined livestock disease dynamics and decentralised economic behaviour," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 393-410, July.
    2. Benjamin M. Gramig & Richard D. Horan & Christopher A. Wolf, 2008. "Livestock Disease Indemnity Design When Moral Hazard Is Followed by Adverse Selection," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 627-641.
    3. David A. Hennessy, 2013. "Biosecurity Externalities and Indemnities for Infectious Animal Diseases," Center for Agricultural and Rural Development (CARD) Publications 13-wp539, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Xie, Fang & Horan, Richard D., 2008. "Disease and Behavioral Dynamics for Brucellosis in Elk and Cattle in the Greater Yellowstone Area," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6404, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Tong Wang & David A. Hennessy, 2015. "Strategic Interactions Among Private and Public Efforts When Preventing and Stamping Out a Highly Infectious Animal Disease," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 435-451.
    6. Tong Wang & Seong Cheol Park, 2014. "Livestock Disease Indemnity Design under Common Uncertainty: A Multi-agent Problem," Economics Bulletin, AccessEcon, vol. 34(3), pages 1396-1409.
    7. Xie, Fang & Horan, Richard D., 2009. "Disease and Behavioral Dynamics for Brucellosis Control in Elk and Cattle in the Greater Yellowstone Area," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-23.
    8. repec:eee:thpobi:v:90:y:2013:i:c:p:135-144 is not listed on IDEAS

    More about this item

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • H4 - Public Economics - - Publicly Provided Goods
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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