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: cepr.org/active/publications/discussion_papers/dp.php?dpno=4980

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.