DP4980 Can we Trust Private Firms as Suppliers of Vaccines for the Avian Influenza?

Author(s): Rikard Forslid

Publication Date: March 2005

Keyword(s): vaccines

JEL(s): D42 , D62 , H10 , I18 , L10

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP4980.asp

Using a simple monopoly model, this note analyses the incentives of a vaccine producer. Because a vaccine tends to eradicate the disease for which it is intended, it also tends to destroy its own market. This means that monopolistic producers may be tempted, in a socially non-optimal way, to delay the introduction of vaccines against new infections until the disease has spread.