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Social distancing in anticipation of pharmaceutical innovations

In a new working paper, network member Flavio Toxvaerd together with Miltiadis Makris consider the equilibrium and socially optimal amount of social distancing when pharmaceutical innovations such as vaccines and treatments are on the horizon.

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. The study also compares the equilibrium paths with the socially optimal counterparts, and discuss policy implications.

Read the full study here.

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