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Infection, Acquired Immunity and Externalities in Treatment

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  • Toxvaerd, Flavio

Abstract

This paper considers a model of infectious disease, such as swine flu, in which privately costly treatment confers immunity on recovered individuals. It is shown that under decentralized decision making, infected individuals ignore the externality that their treatment has on susceptible individuals and thus seek treatment only if it is privately optimal to do so. In contrast, a benevolent central planner who does take this externality into account in choosing the level of aggregate treatment, may choose to either eradicate the disease or to retard its eventual dissemination into the population even when individuals would not find it privately optimal to do so. The analysis shows that when immunity from future infection is obtained through recovery, treatment resembles vaccination in its effects on infection dynamics, but important differences remain. Vaccination is shown to more effectively curb infection than does treatment. Last, the inefficiency associated with decentralized decision making can be corrected through subsidized treatment offered on a first-come first-served basis.

Suggested Citation

  • Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8111
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    References listed on IDEAS

    as
    1. Goldman Steven Marc & Lightwood James, 2002. "Cost Optimization in the SIS Model of Infectious Disease with Treatment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-24, April.
    2. Barrett, Scott & Hoel, Michael, 2007. "Optimal disease eradication," Environment and Development Economics, Cambridge University Press, vol. 12(5), pages 627-652, October.
    3. Scott Barrett, 2003. "Global Disease Eradication," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 591-600, 04/05.
    4. Toxvaerd, Flavio, 2010. "Recurrent Infection and Externalities in Prevention," CEPR Discussion Papers 8112, C.E.P.R. Discussion Papers.
    5. Boulier Bryan L. & Datta Tejwant S. & Goldfarb Robert S, 2007. "Vaccination Externalities," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-27, May.
    6. Brito, Dagobert L. & Sheshinski, Eytan & Intriligator, Michael D., 1991. "Externalities and compulsary vaccinations," Journal of Public Economics, Elsevier, vol. 45(1), pages 69-90, June.
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    Cited by:

    1. Andrea Galeotti & Brian W. Rogers, 2013. "Strategic Immunization and Group Structure," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 1-32, May.
    2. Rowthorn, Robert & Toxvaerd, Flavio, 2012. "The Optimal Control of Infectious Diseases via Prevention and Treatment," CEPR Discussion Papers 8925, C.E.P.R. Discussion Papers.
    3. Toxvaerd, Flavio, 2010. "Recurrent Infection and Externalities in Prevention," CEPR Discussion Papers 8112, C.E.P.R. Discussion Papers.
    4. repec:esx:essedp:707 is not listed on IDEAS

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    More about this item

    Keywords

    Acquired immunity; Economic epidemiology; Externalities; Treatment;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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