Efficient policy interventions in an epidemic

Alberto Bisin, Piero Gottardi

    Research output: Contribution to journalArticlepeer-review


    In the context of an epidemic, a society is forced to face a system of externalities in consumption and in production. Command economy interventions can support efficient allocations at the cost of severe information requirements. Competitive markets for infection rights (alternatively, Pigouvian taxes) can guarantee efficiency without requiring direct policy interventions on socio-economic activities. We demonstrate that this is the case also with moral hazard, when the infections cannot be associated to the specific activities which originated them. Finally, we extend the analysis to situations where governments have only incomplete information regarding the values of the parameters of the infection or of firms’ production.

    Original languageEnglish (US)
    Article number104444
    JournalJournal of Public Economics
    StatePublished - Aug 2021


    • Epidemic
    • Externalities
    • Infection rights
    • Pigouvian taxes

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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