Essays on the Economics of Disease, with Particular Reference to Livestock

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Wang, Tong
Major Professor
David A. Hennessy
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Optimal design of government policies in private sector livestock disease control is of great importance due to increasing social cost of the disease. This dissertation analyzes and evaluates relevant policy issues with a series of four essays, each emphasizing a different facet of the problem.

While common uncertainty is not uncommon when it comes to livestock industry, it has not been incorporated in the optimal livestock indemnity design. Using a principal multi-agent framework, my first paper suggests that relative performance evaluation (RPE) method is most justified either when high correlation exists between farmers' disease prevalence rate or when the effectiveness of biosecurity effort proves to be low.

One aim of my second paper is to provide an objective evaluation of comparative shortage of food animal veterinarians in the United States. The other target of it is to evaluate the Veterinary Medicine Loan Repayment Program (VMLRP), implemented in 2010 to address the perceived regional shortages in veterinary occupations. On the whole the program appears to perform quite well. However, comparative shortage is generally more severe in states that have no VMLRP designated private practice shortage counties than in states that do.

When it comes to voluntary livestock disease control program, neither the magnitude nor the time length of government subsidy required in motivating participation is clear. The third paper demonstrates a strategic complementarity among participation decisions, where after a slow start momentum can build such that the market premium for participation and the participation rate increase sequentially. Guided by this finding, we identify plausible conditions under which temporary government subsidies to the least cost effective producers could cause tipping toward full participation to occur.

On the farm level, an infectious livestock disease could be eradicated. However, permanent immunity from all livestock diseases is not possible. Moreover, once one farm contracts the disease, all the neighboring farms could be immediately affected. In this context, the fourth paper provides a succinct two-agent model to explore the interactions between farmers' biosecurity and eradication efforts. Intra-farm temporal interactions and inter-farm contemporaneous interactions coexist. Our model suggests a preference to the subsidy on biosecurity effort rather than on eradication efforts.

Sun Jan 01 00:00:00 UTC 2012