A real option analysis for stochastic disease control and vaccine stockpile policy: An application to H1N1 in Korea

Research output: Contribution to journalArticle

Abstract

Vaccination is mostly used for controlling the diffusion of an infectious disease. This paper attempts to bridge a gap between economic model and epidemiological model to analyze the optimal vaccination strategy when the diffusion of pandemic disease follows a stochastic process. Impulsive vaccination is considered as an effective option to control an infectious disease. A real option model under stochastic Susceptible-Infected-Susceptible (SIS) environment is developed to examine the optimal vaccination threshold when the social costs and benefits of vaccination efforts are considered. A numerical illustration is provided for the case of H1N1 in Korea to show the herd immunity level as a policy rule to suppress epidemic. Policy implications are discussed regarding the vaccine stockpile as a countermeasure to epidemic diffusion.

Original languageEnglish
Pages (from-to)187-194
Number of pages8
JournalEconomic Modelling
Volume53
DOIs
Publication statusPublished - 2016 Feb 1

Fingerprint

Korea
Real options analysis
Vaccination
Disease control
Vaccine
Infectious diseases
Costs and benefits
Policy implications
Social costs
Immunity
Social benefits
Countermeasures
Stochastic processes
Real options
Policy rules

Keywords

  • H1N1
  • Real options
  • Stochastic disease
  • Vaccination policy

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

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title = "A real option analysis for stochastic disease control and vaccine stockpile policy: An application to H1N1 in Korea",
abstract = "Vaccination is mostly used for controlling the diffusion of an infectious disease. This paper attempts to bridge a gap between economic model and epidemiological model to analyze the optimal vaccination strategy when the diffusion of pandemic disease follows a stochastic process. Impulsive vaccination is considered as an effective option to control an infectious disease. A real option model under stochastic Susceptible-Infected-Susceptible (SIS) environment is developed to examine the optimal vaccination threshold when the social costs and benefits of vaccination efforts are considered. A numerical illustration is provided for the case of H1N1 in Korea to show the herd immunity level as a policy rule to suppress epidemic. Policy implications are discussed regarding the vaccine stockpile as a countermeasure to epidemic diffusion.",
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AB - Vaccination is mostly used for controlling the diffusion of an infectious disease. This paper attempts to bridge a gap between economic model and epidemiological model to analyze the optimal vaccination strategy when the diffusion of pandemic disease follows a stochastic process. Impulsive vaccination is considered as an effective option to control an infectious disease. A real option model under stochastic Susceptible-Infected-Susceptible (SIS) environment is developed to examine the optimal vaccination threshold when the social costs and benefits of vaccination efforts are considered. A numerical illustration is provided for the case of H1N1 in Korea to show the herd immunity level as a policy rule to suppress epidemic. Policy implications are discussed regarding the vaccine stockpile as a countermeasure to epidemic diffusion.

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