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Economics of Antibiotic Resistance: A Theory of Optimal Use

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  • Laxminarayan, Ramanan

    () (Resources for the Future)

  • Brown, Gardner

Abstract

In recent years bacteria have become increasingly resistant to antibiotics, leading to a decline in the effectiveness of antibiotics in treating infectious disease. This paper uses a framework based on an epidemiological model of infection in which antibiotic effectiveness is treated as a nonrenewable resource. In the model presented, bacterial resistance (the converse of effectiveness) develops as a result of selective pressure on nonresistant strains due to antibiotic use. When two antibiotics are available, the optimal proportion and timing of their use depends precisely on the difference between the rates at which bacterial resistance to each antibiotic evolves and on the differences in their pharmaceutical costs. Standard numerical techniques are used to illustrate cases for which the analytical problem is intractable.

Suggested Citation

  • Laxminarayan, Ramanan & Brown, Gardner, 2000. "Economics of Antibiotic Resistance: A Theory of Optimal Use," Discussion Papers dp-00-36, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-00-36
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    References listed on IDEAS

    as
    1. Philipson, Tomas, 2000. "Economic epidemiology and infectious diseases," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 33, pages 1761-1799 Elsevier.
    2. D. Hueth & U. Regev, 1974. "Optimal Agricultural Pest Management with Increasing Pest Resistance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 543-552.
    3. Hartwick, John M, 1978. "Exploitation of Many Deposits of an Exhaustible Resource," Econometrica, Econometric Society, vol. 46(1), pages 201-217, January.
    4. Gardner Brown & Ramanan Laxminarayan, 1998. "Economics of Antibiotic Resistance," Discussion Papers in Economics at the University of Washington 0060, Department of Economics at the University of Washington.
    5. Brown, Gardner & Layton, David F., 1996. "Resistance economics: social cost and the evolution of antibiotic resistance," Environment and Development Economics, Cambridge University Press, vol. 1(03), pages 349-355, July.
    6. Weitzman, Martin L., 1976. "The optimal development of resource pools," Journal of Economic Theory, Elsevier, vol. 12(3), pages 351-364, June.
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    Cited by:

    1. Herrmann, Markus & Gaudet, Gérard, 2009. "The economic dynamics of antibiotic efficacy under open access," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 334-350, May.
    2. Gardner Brown & Ramanan Laxminarayan, 1998. "Economics of Antibiotic Resistance," Working Papers 0060, University of Washington, Department of Economics.
    3. David H. Howard, 2004. "Resistance-induced antibiotic substitution," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 585-595.
    4. Adrian Towse & Priya Sharma, 2011. "Incentives for R&D for New Antimicrobial Drugs," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(2), pages 331-350.
    5. Herrmann, Markus & Nkuiya, Bruno & Dussault, Anne-Renée, 2013. "Innovation and antibiotic use within antibiotic classes: Market incentives and economic instruments," Resource and Energy Economics, Elsevier, vol. 35(4), pages 582-598.
    6. Herrmann, Markus, 2010. "Monopoly pricing of an antibiotic subject to bacterial resistance," Journal of Health Economics, Elsevier, vol. 29(1), pages 137-150, January.
    7. Park, Hojeong, 2016. "A real option analysis for stochastic disease control and vaccine stockpile policy: An application to H1N1 in Korea," Economic Modelling, Elsevier, vol. 53(C), pages 187-194.
    8. Gerard Gaudet & Michel Moreaux & Stephen W. Salant, 2001. "Intertemporal Depletion of Resource Sites by Spatially Distributed Users," American Economic Review, American Economic Association, vol. 91(4), pages 1149-1159, September.
    9. Costello, Christopher & Quérou, Nicolas & Tomini, Agnes, 2015. "Partial enclosure of the commons," Journal of Public Economics, Elsevier, vol. 121(C), pages 69-78.
    10. Fischer, Carolyn & Laxminarayan, Ramanan, 2005. "Sequential development and exploitation of an exhaustible resource: do monopoly rights promote conservation?," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 500-515, May.
    11. Thomas Heister & Christian Hagist & Klaus Kaier, 2015. "Resistance Elasticity of Antibiotic Demand in Intensive Care," WHU Working Paper Series - Economics Group 15-01, WHU - Otto Beisheim School of Management.
    12. Amitrajeet Batabyal & Peter Nijkamp, 2005. "Alternate strategies for managing resistance to antibiotics and pesticides," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(1), pages 39-51, March.
    13. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2011. "Externalities in a life cycle model with endogenous survival," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 627-641.
    14. M. Filippini & G. Masiero, 2012. "An empirical analysis of habit and addiction to antibiotics," Empirical Economics, Springer, vol. 42(2), pages 471-486, April.
    15. Schumacher, Sara K. & Marsh, Thomas L. & Williams, Kimberly A., 2003. "Optimal Pest Control In Floriculture Production Of Ornamental Crops," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35025, Southern Agricultural Economics Association.
    16. Elamin H. Elbasha, 2003. "Deadweight loss of bacterial resistance due to overtreatment," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 125-138.
    17. Daniel Bennett & Che-Lun Hung & Tsai-Ling Lauderdale, 2015. "Health Care Competition and Antibiotic Use in Taiwan," Journal of Industrial Economics, Wiley Blackwell, vol. 63(2), pages 371-393, June.
    18. Kallis, Giorgos & Norgaard, Richard B., 2010. "Coevolutionary ecological economics," Ecological Economics, Elsevier, vol. 69(4), pages 690-699, February.
    19. Laxminarayan, Ramanan & Weitzman, Martin L., 2002. "On the implications of endogenous resistance to medications," Journal of Health Economics, Elsevier, vol. 21(4), pages 709-718, July.
    20. Guttormsen, Atle G. & Kristofersson, Dadi & Nævdal, Eric, 2008. "Optimal management of renewable resources with Darwinian selection induced by harvesting," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 167-179, September.
    21. Fischer, Carolyn & Laxminarayan, Ramanan, 2010. "Managing partially protected resources under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 59(2), pages 129-141, March.
    22. Just, Richard E. & Netanyahu, Sinaia & Olson, Lars J., 2005. "Depletion of natural resources, technological uncertainty, and the adoption of technological substitutes," Resource and Energy Economics, Elsevier, vol. 27(2), pages 91-108, June.
    23. Laxminarayan, Ramanan, 2001. "Bacterial Resistance and the Optimal Use of Antibiotics," Discussion Papers dp-01-23, Resources For the Future.
    24. Eric Nævdal, 2008. "Animal rationality and implications for resource management: the case of biological reserves for moose and pine," Journal of Bioeconomics, Springer, vol. 10(2), pages 145-163, August.
    25. Ramanan Laxminarayan & R. Simpson, 2002. "Refuge Strategies for Managing Pest Resistance in Transgenic Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(4), pages 521-536, August.

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