Optimal Antimicrobial Use under Countervailing Externalities

Abstract

Over-or underprovision of antimicrobials under free-riding and resistance externalities can be economically important through their impacts on animal health, human health, and food security. This paper models antimicrobial use given disease dynamics with (i) free-riding incentives and (ii) antimicrobial resistance. Our results suggest a strong potential for overprovision of antimicrobials when ignoring resistance dynamics. Numerical simulation indicates an increase in the cost of disease management with increases in resistance levels. Policy implications are discussed in the context of animal health and disease-control subsidy programs in the developing world as well as unregulated sale of antimicrobials.