DP8925 The Optimal Control of Infectious Diseases via Prevention and Treatment

Author(s): Robert Rowthorn , Flavio Toxvaerd

Publication Date: April 2012

Keyword(s): Economic epidemiology , Hysteresis , Non-convex systems , Optimal and equilibrium policy mix , Treatment and prevention

JEL(s): C73 , I18

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP8925.asp

This paper fully characterizes the optimal control of a recurrent infectious disease through the use of (non-vaccine) prevention and treatment. The dynamic system may admit multiple steady states and the optimal policy may be path dependent. We find that an optimal path cannot end at a point with maximal prevention; it is necessarily zero or at an intermediate level. In contrast, an optimal path must end at a point at which treatment is either maximal or minimal. We find that the comparative statics of the model may radically differ across steady states, which has important policy implications. Last, we consider the model with decentralized decision making and compare the equilibrium outcomes with the socially optimal outcomes. We find that steady state prevalence levels in decentralized equilibrium must be equal to or higher than the socially optimal levels. While steady state treatment levels under decentralization are typically socially optimal, steady state prevention (if used) is socially suboptimal.