Market structure and communicable

Abstract. Communicable diseases pose a formidable challenge for public policy. Using numerical simulations, we show under which scenarios a monopolist’s price and preva-lence paths converge to a non-zero steady state. In contrast, a planner typically eradi-cates the disease. If eradication is impossible, the planner subsidizes treatments as long as the prevalence can be controlled. Drug resistance exacerbates the welfare difference between monopoly and first best outcomes. Nevertheless, because the negative external-ities from resistance compete with the positive externalities of treatment, a mixed com-petition/monopoly regime may perform better than competition alone. This result has important implications for the design of many drug patents. JEL classification: I18, L12 Structure de marche ́ et maladies contagieuses. Les maladies contagieuses posent un défi important a ̀ la politique publique. A l’aide de simulations numériques, on montre dans quels scénarios les prix de monopole et le sentier de prévalence tendent a ̀ engendrer un régime permanent ou ̀ la maladie ne disparaı̂t pas. Un planificateur typiquement élimine la maladie. Si l’éradication est impossible, le planificateur subventionne les traitements aussi longtemps que la prévalence peut être contrôlée. La résistance au remède agrandit l’écar