Managing dynamic epidemiological risks through trade

Richard Horan, Eli P. Fenichel, David Finnoff and Christopher Wolf ()

Journal of Economic Dynamics and Control, 2015, vol. 53, issue C, 192-207

Abstract: There is growing concern that trade, by connecting geographically isolated regions, unintentionally facilitates the spread of invasive pathogens and pests – forms of biological pollution that pose significant risks to ecosystem and human health. We use a bioeconomic framework to examine whether trade always increases private risks, focusing specifically on pathogen risks from live animal trade. When the pathogens have already established and traders bear some private risk, we find two results that run counter to the conventional wisdom on trade. First, uncertainty about the disease status of individual animals held in inventory may increase the incentives to trade relative to the disease-free case. Second, trade may facilitate reduced long-run disease prevalence among buyers. These results arise because disease risks are endogenous due to dynamic feedback processes involving valuable inventories, and markets facilitate the management of private risks that producers face with or without trade.

Keywords: Bioeconomics; Arbitrage; Infectious disease; Joint determination; Thresholds (search for similar items in EconPapers)
JEL-codes: I19 Q56 Q57 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:53:y:2015:i:c:p:192-207

DOI: 10.1016/j.jedc.2015.02.005

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