Efficient policy interventions in an epidemic

Alberto Bisin and Piero Gottardi

Journal of Public Economics, 2021, vol. 200, issue C

Abstract: In the context of an epidemic, a society is forced to face a system of externalities in consumption and in production. Command economy interventions can support efficient allocations at the cost of severe information requirements. Competitive markets for infection rights (alternatively, Pigouvian taxes) can guarantee efficiency without requiring direct policy interventions on socio-economic activities. We demonstrate that this is the case also with moral hazard, when the infections cannot be associated to the specific activities which originated them. Finally, we extend the analysis to situations where governments have only incomplete information regarding the values of the parameters of the infection or of firms’ production.

Keywords: Epidemic; Externalities; Infection rights; Pigouvian taxes (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Working Paper: Efficient Policy Interventions in an Epidemic (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:200:y:2021:i:c:s0047272721000803

DOI: 10.1016/j.jpubeco.2021.104444

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