Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals

David A. Hennessy

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: We develop a dynamic capital valuation model in which each farm can take an action with farm-varying cost to increase the probability of not contracting a disease. In the presence of infection externalities, circumstances are identified under which multiple equilibria exist and where the one involving the most extensive set of action takers is socially optimal. It is suggested that costly capital markets are one factor in determining the extent of endemic disease in a region. The introduction of frictions, such as dealing with a cumbersome veterinary public health bureaucracy, can enhance social welfare by encouraging precautionary biosecurity actions. Some technical innovations can reduce social welfare. The model is also extended to study a voluntary herd depopulation scheme. Moral hazard in the biosecurity action will dampen the scheme's welfare effect.

Keywords: biosecurity; continuous time; multiple equilibria; Nash behavior; reinfection. (search for similar items in EconPapers)
JEL-codes: D20 H4 Q1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-pbe
Date: 2005-12
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Related works:
Working Paper: Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals (2005)
Journal Article: Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:ias:cpaper:05-wp418

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