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An Agent-Based approach to high-cost drugs for infectious diseases

Author

Listed:
  • Andrea Caravaggio
  • Silvia Leoni

Abstract

The COVID-19 pandemic has underscored the need for modeling tools that account for the spatial and institutional heterogeneity underlying real-world epidemic dynamics. We develop a spatially structured agent-based model (ABM) in which decentralized health authorities (HAs) allocate costly treatments under local budget constraints to manage the spread of an infectious disease. Individuals are distributed across a grid of locations, with contagion governed by discrete-time Susceptible-Infected-Recovered (SIR) dynamics and spatial spillovers through local interactions. At each time step, HAs choose treatment intensity endogenously based on local infection levels, available resources, and pricing conditions. We analyze how key factors—such as treatment efficacy, pricing schemes, and initial outbreak distribution—shape both local and aggregate outcomes. In addition to a benchmark case with homogeneous pricing, we explore a parsimonious pricing scheme where prices vary across cells. Analytical results identify the threshold conditions for disease eradication, while simulations show how decentralized decisions and spatial feedback can generate persistent inequalities in infection and treatment. Our findings highlight the importance of integrating spatial structure, economic constraints, and pricing design in epidemic policy modeling.

Suggested Citation

  • Andrea Caravaggio & Silvia Leoni, 2025. "An Agent-Based approach to high-cost drugs for infectious diseases," Working Papers - Economics wp2025_20.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2025_20.rdf
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    References listed on IDEAS

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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