A real option analysis for stochastic disease control and vaccine stockpile policy: An application to H1N1 in Korea

Hojeong Park

Economic Modelling, 2016, vol. 53, issue C, 187-194

Abstract: Vaccination is mostly used for controlling the diffusion of an infectious disease. This paper attempts to bridge a gap between economic model and epidemiological model to analyze the optimal vaccination strategy when the diffusion of pandemic disease follows a stochastic process. Impulsive vaccination is considered as an effective option to control an infectious disease. A real option model under stochastic Susceptible-Infected-Susceptible (SIS) environment is developed to examine the optimal vaccination threshold when the social costs and benefits of vaccination efforts are considered. A numerical illustration is provided for the case of H1N1 in Korea to show the herd immunity level as a policy rule to suppress epidemic. Policy implications are discussed regarding the vaccine stockpile as a countermeasure to epidemic diffusion.

Keywords: Vaccination policy; Real options; Stochastic disease; H1N1 (search for similar items in EconPapers)
JEL-codes: D81 I18 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:53:y:2016:i:c:p:187-194

DOI: 10.1016/j.econmod.2015.12.005

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