Antibiotic resistance Widespread use of penicillin responsible for increases in antibiotic resistance Every dose of antibiotics breeds more resistant bacteria Use of antibiotic drugs imposes a negative externality Despite this negative externality,the use of some antibiotic drugs may still be socially efficient But in some cases,the social costs of antibiotic use can outweigh benefits Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Antibiotic resistance Widespread use of penicillin responsible for increases in antibiotic resistance Every dose of antibiotics breeds more resistant bacteria Use of antibiotic drugs imposes a negative externality Despite this negative externality, the use of some antibiotic drugs may still be socially efficient But in some cases, the social costs of antibiotic use can outweigh benefits
The market for antibiotics The social supply curve is higher than the private supply curve because each dose of antibiotics is more costly to society than its marginal cost of production. Patients make purchase decisions based on the private price p*priv but society as a whole pays the greater price P*soc whenever an antibiotic is purchased. The difference between the two price levels P*soc P*priv is equal to the additional cost of antibiotic resistance. Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics The market for antibiotics The social supply curve is higher than the private supply curve because each dose of antibiotics is more costly to society than its marginal cost of production. Patients make purchase decisions based on the private price P*priv but society as a whole pays the greater price P*soc whenever an antibiotic is purchased. The difference between the two price levels P*soc - P*priv is equal to the additional cost of antibiotic resistance