Forming the AMR Club: The Exclusivity-Mobility Tradeoff

We study the formation of an international antimicrobial resistance (AMR) club, a two-country coalition in which members jointly finance a new antibiotic and get early access, while non-members wait out an exclusivity period. The countries are linked by cross-border mobility, and the drug is financed through a fund-and-refund scheme that pays the developer a fixed reward during development plus a refund proportional to the use of the new antibiotic after launch. Our analysis highlights an exclusivity-mobility tradeoff that distinguishes antibiotic innovation from other global public goods. A longer exclusivity window strengthens internal stability of the coalition by increasing the cost of defection, but leads to higher resistance in non-member countries which feeds back to the club members through mobility. Exclusivity and member contributions are complementary in sustaining the grand coalition, while exclusivity and mobility act as substitutes at the margin. Extending the analysis to countries of different sizes raises the minimum exclusivity window needed to sustain cooperation, but uniquely identifies the larger country as the financier under partial cooperation.