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Open Access to the Resource of Antibiotic Treatment Efficacy Subject to Bacterial Resistance

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  • Bruno Nkuiya
  • Markus Herrmann

Abstract

In this paper, we are interested in how a pharmaceutical industry manages existing antibiotic drugs in the context of bacterial resistance. We consider a model based on an epidemiological framework where antibiotic recovery rates, and thus intrinsic qualities, may differ. Antibiotic efficacy is modeled as a common pool of a non-renewable resource to which antibiotic producers have open access. The paper derives antibiotic demands within a vertical differentiation model and characterizes the dynamics of infected individuals, antibiotic efficacy and treatment rates under the open-access and the socially optimal allocation. We show that the high-quality antibiotic drug loses its comparative advantage over time under both allocations, such that the low-quality drug should be used longer. This occurs at a later point of time in the social optimum and allows for a better control of infection in the longer run. In contrast with the ambiguous outcome reported in the literature, the socially optimal steady-state level of antibiotic efficacy is lower than that of the open-access allocation. We also extend our analysis to a strategic, duopolistic context.

Suggested Citation

  • Bruno Nkuiya & Markus Herrmann, 2013. "Open Access to the Resource of Antibiotic Treatment Efficacy Subject to Bacterial Resistance," Cahiers de recherche CREATE 2013-2, CREATE.
  • Handle: RePEc:lvl:creacr:2013-2
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    File URL: https://www.create.ulaval.ca/sites/create.ulaval.ca/files/Publications/create2013-2.pdf
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    More about this item

    Keywords

    Antibiotic management; Non-renewable resource; Open access; Social optimum; Public health;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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