 Can Competition Extend the Golden Age of Antibiotics?Mukesh Eswaran and Nancy Gallini () Microeconomics.ca working papers from Vancouver School of Economics Abstract: Countries world wide face an imminent global health crisis. As resistant bacteria render the current stock of antibiotics ine¤ective and the pipeline of back-up drugs runs dry, pharmaceutical companies are abandoning their research in antibiotics. In this paper we ask: Why are pharmaceutical companies closing antibiotic research labs when the stakes are so high? Implementing a simple dynamic framework, we show that the environment for new antibiotics is relatively hostile, compared to other medicines, due to market failures that result in excessive use and acceleration of natural selection. The analysis reveals, however, that increased competition between drugs can actually slow down the rate of resistance without, in some cases, diluting research incentives. This result, which is bolstered by scientific evidence, arises from a fundamental interplay between economic and biological externalities. We propose a patent-antitrust regime for aligning drug research and usage with those of the social planner, which implies an alternative justification of the patent system. Keywords: antibiotic resistence; market competition; R&D incentives; patents (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ubc:pmicro:tina_marandola-2018-1 Access Statistics for this paper More papers in Microeconomics.ca working papers from Vancouver School of Economics |
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