Great Expectations: Social Distancing in Anticipation of Pharmaceutical Innovations
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Authors
Makris, M.
Toxvaerd, F.
Publication Date
2020-10-21Series
Cambridge Working Papers in Economics
Cambridge-INET Working Paper Series
Publisher
Faculty of Economics, University of Cambridge
Type
Working Paper
Metadata
Show full item recordCitation
Makris, M., & Toxvaerd, F. (2020). Great Expectations: Social Distancing in Anticipation of Pharmaceutical Innovations. https://doi.org/10.17863/CAM.62310
Abstract
This paper analyzes equilibrium social distancing behavior in a model where pharmaceutical innovations, such as effective vaccines and treatments, are anticipated to arrive in the future. Once such an innovation arrives, costly social distancing can be greatly reduced. We characterize how the anticipation of such innovations influences the pre-innovation path of social distancing. We show that when vaccines are anticipated, equilibrium social distancing is ramped up as the arrival date approaches to increase the probability of reaching the post-innovation phase in the susceptible state. In contrast, under anticipated treatment, equilibrium social distancing is completely phased out by the time of arrival. We compare the equilibrium paths with the socially optimal counterparts and discuss policy implications.
Keywords
Economic epidemiology, social distancing, pharmaceutical interventions, vaccination, treatment
Identifiers
CWPE2097, C-INET2046
This record's DOI: https://doi.org/10.17863/CAM.62310
This record's URL: https://www.repository.cam.ac.uk/handle/1810/315201
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