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Makris, M. and Toxvaerd, F.M.O.

Great Expectations: Social Distancing in Anticipation of Pharmaceutical Innovations

WP Number: 2046

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

JEL Codes: C73 I18

Author links: Flavio Toxvaerd  

PDF: wp2046.pdf

Open Access Link: 10.17863/CAM.62310

Theme: information