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Recurrent Infection and Externalities in Prevention

  • Toxvaerd, Flavio

This paper studies a model of disease propagation in which agents can control their exposure to infection by engaging in costly preventive behavior. Agents are assumed to be fully rational, strategically sophisticated and forward-looking. I show that on the transition path, optimal behavior is Markovian, stationary and myopic and there are no contemporaneous externalities. In steady state, in which infection is endemic, there are strategic substitutes. Individuals over-expose themselves to infection, leading to sub-optimally high steady state disease prevalence. Infectivity-reducing measures such as pre-exposure prophylaxis lead to strictly worse steady state levels of disease prevalence. While revealed preferences show that the first-best level of welfare must increase, rational disinhibition, which makes increased exposure to infection a rational response to such measures, may lead to decreased welfare under decentralization.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8112.

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Date of creation: Nov 2010
Date of revision:
Handle: RePEc:cpr:ceprdp:8112
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  1. Scott Barrett, 2003. "Global Disease Eradication," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 591-600, 04/05.
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  8. Francis, P.J. Peter J., 2004. "Optimal tax/subsidy combinations for the flu season," Journal of Economic Dynamics and Control, Elsevier, vol. 28(10), pages 2037-2054, September.
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  12. Avner Ahituv & V. Joseph Hotz & Tomas Philipson, 1996. "The Responsiveness of the Demand for Condoms to the Local Prevalence of AIDS," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 869-897.
  13. 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.
  14. Oster, Emily, 2012. "HIV and sexual behavior change: Why not Africa?," Journal of Health Economics, Elsevier, vol. 31(1), pages 35-49.
  15. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
  16. Auld M. Christopher, 2006. "Estimating Behavioral Response to the AIDS Epidemic," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-29, April.
  17. Hartl, Richard F., 1987. "A simple proof of the monotonicity of the state trajectories in autonomous control problems," Journal of Economic Theory, Elsevier, vol. 41(1), pages 211-215, February.
  18. repec:oup:qjecon:v:111:y:1996:i:2:p:549-73 is not listed on IDEAS
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