Market Structure and Communicable Diseases

Working Papers from University of Toronto, Department of Economics

Abstract: Communicable diseases pose a formidable challenge for public policy. Using numerical simulations, we show under which scenarios a monopolist’s price and prevalence paths converge to a nonzero steady-state. In contrast, a planner typically eradicates the disease. If eradication is impossible, the planner subsidizes treatments as long as the prevalence can be controlled. Drug resistance exacerbates the welfare difference between monopoly and first best outcomes. Nevertheless, because the negative externalities from resistance compete with the positive externalities of treatment, a mixed competition/monopoly regime may perform better than competition alone. This result has important implications for the design of many drug patents.

Keywords: communicable disease; resistance; epidemiology; patent (search for similar items in EconPapers)
JEL-codes: I18 L12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-com, nep-hea and nep-mic
Date: Written 2005-06-27
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Related works:
Journal Article: Market structure and communicable diseases (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-241

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