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Strategic Interactions Among Private and Public Efforts when Preventing and Stamping Out an Highly Infectious Animal Disease

Upon outbreak of a contagious animal disease, a primary motive for restoring disease-free status is often to regain access to international product markets. Efforts applied toward continuing or regaining such access is a public good-all growers benefit regardless of extent of private efforts taken while exclusion is impractical. Private incentives to take preventive measures and stamp-out efforts interact in complex ways. There are intra-farm temporal interactions and also inter-farm contemporaneous interactions. Public effort also takes place and interacts with private efforts. This paper provides a succinct multi-agent model to explore these interactions in social optimum and in Nash equilibrium, and also to explore how socially optimal and Nash behavior differ. Comparative statics under social optimality are more straightforward than under Nash equilibrium. Whether in social optimum or Nash equilibrium, public prevention efforts complement both private prevention and private stamp-out efforts. However, public stamp-out efforts substitute for both private stamp-out and private prevention efforts. Reasonable conditions are identified under which Nash levels of private prevention and stamp-out efforts are both below socially optimal levels. Concerning policy prescriptions, efforts to secure property rights and reduce property transfer costs should promote prevention and eradication efforts. Other things equal, public prevention effort should be more effective in promoting welfare than comparable public stamp-out effort. Subsidies on private efforts should favor prevention efforts because subsidies on eradication effort may discourage prevention effort. Even if produce from diseased animals is safe to consume and acceptable to consumers, it may be optimal to destroy such produce.

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Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 13-wp541.

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Date of creation: Oct 2013
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Handle: RePEc:ias:cpaper:13-wp541
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  1. Geoffard, Pierre-Yves & Philipson, Tomas, 1997. "Disease Eradication: Private versus Public Vaccination," American Economic Review, American Economic Association, vol. 87(1), pages 222-30, March.
  2. Pendell, Dustin L. & Leatherman, John C. & Schroeder, Ted C. & Alward, Gregory S., 2007. "The Economic Impacts of a Foot-And-Mouth Disease Outbreak: A Regional Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(October), October.
  3. Mahul, Olivier & Gohin, Alexandre, 1999. "Irreversible Decision Making in Contagious Animal Disease Control under Uncertainty: An Illustration Using FMD in Brittany," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(1), pages 39-58, March.
  4. David A. Hennessy, 2005. "Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals," Center for Agricultural and Rural Development (CARD) Publications 05-wp418, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  5. Helen H. Jensen, 2005. "Infectious Disease, Productivity, and Scale in Open and Closed Animal Production Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 900-917.
  6. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  7. 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.
  8. Jarkko K. Niemi & Heikki Lehtonen, 2011. "Modelling pig sector dynamic adjustment to livestock epidemics with stochastic-duration trade disruptions," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(4), pages 529-551, October.
  9. Michael Kremer, 1996. "Integrating Behavioral Choice into Epidemiological Models of the AIDS Epidemic," NBER Working Papers 5428, National Bureau of Economic Research, Inc.
  10. Marie‐Hélène Felt & Jean‐Philippe Gervais & Bruno Larue, 2011. "Market power and import bans: the case of Japanese pork imports," Agribusiness, John Wiley & Sons, Ltd., vol. 27(1), pages 47-61, Winter.
  11. Kremer, Michael, 1996. "Integrating Behavioral Choice into Epidemiological Models of AIDS," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 549-73, May.
  12. Robert Innes, 2003. "Crop Insurance in a Political Economy: An Alternative Perspective on Agricultural Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 318-335.
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