Open Access to the Resource of Antibiotic Treatment Efficacy Subject to Bacterial Resistance

Bruno Nkuiya and Markus Herrmann (markus.herrmann@ecn.ulaval.ca)

Cahiers de recherche CREATE from CREATE

Abstract: In this paper, we are interested in how a pharmaceutical industry manages existing antibiotic drugs in the context of bacterial resistance. We consider a model based on an epidemiological framework where antibiotic recovery rates, and thus intrinsic qualities, may differ. Antibiotic efficacy is modeled as a common pool of a non-renewable resource to which antibiotic producers have open access. The paper derives antibiotic demands within a vertical differentiation model and characterizes the dynamics of infected individuals, antibiotic efficacy and treatment rates under the open-access and the socially optimal allocation. We show that the high-quality antibiotic drug loses its comparative advantage over time under both allocations, such that the low-quality drug should be used longer. This occurs at a later point of time in the social optimum and allows for a better control of infection in the longer run. In contrast with the ambiguous outcome reported in the literature, the socially optimal steady-state level of antibiotic efficacy is lower than that of the open-access allocation. We also extend our analysis to a strategic, duopolistic context.

Keywords: Antibiotic management; Non-renewable resource; Open access; Social optimum; Public health (search for similar items in EconPapers)
JEL-codes: I18 L13 Q21 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com, nep-env and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:creacr:2013-2

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