Hennessy, David A.

Ecological Economics Vol. 68 no. 1-2 (December 2008): 230-239.

Protection against pest invasion is a public good. Yet the nature of private incentives to avoid entry is poorly understood. This work shows that, due to increasing returns or network effects, private actions to avoid entry are strategic complements. This means that compulsory action, at least by a subset of parties, can be an effective policy. Both heterogeneity in biosecurity costs and the effect of private actions on the extent of the invasion threat are shown to have ambiguous effects on the magnitude of welfare loss due to strategic behavior. Communicated leadership by some party is preferred to simultaneous moves, and it may be best if the party with highest biosecurity costs assumes a leadership role.

JEL Classification: D6, H4, Q2

Keywords: communication; complementarity; increasing returns; infectious disease; invasive species; network economics; public good

Full Text