A Montero auction mechanism to regulate antimicrobial consumption in agriculture

Research output: Contribution to journalJournal articleResearchpeer-review

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A Montero auction mechanism to regulate antimicrobial consumption in agriculture. / Belay, Dagim Gashawtena; Abate, Tenaw G.; Jensen, Jørgen Dejgård.

In: American Journal of Agricultural Economics, 18.02.2020.

Research output: Contribution to journalJournal articleResearchpeer-review

Harvard

Belay, DG, Abate, TG & Jensen, JD 2020, 'A Montero auction mechanism to regulate antimicrobial consumption in agriculture', American Journal of Agricultural Economics. https://doi.org/10.1002/ajae.12079

APA

Belay, D. G., Abate, T. G., & Jensen, J. D. (2020). A Montero auction mechanism to regulate antimicrobial consumption in agriculture. American Journal of Agricultural Economics. https://doi.org/10.1002/ajae.12079

Vancouver

Belay DG, Abate TG, Jensen JD. A Montero auction mechanism to regulate antimicrobial consumption in agriculture. American Journal of Agricultural Economics. 2020 Feb 18. https://doi.org/10.1002/ajae.12079

Author

Belay, Dagim Gashawtena ; Abate, Tenaw G. ; Jensen, Jørgen Dejgård. / A Montero auction mechanism to regulate antimicrobial consumption in agriculture. In: American Journal of Agricultural Economics. 2020.

Bibtex

@article{3f24ee1c0780429fa278057e53f8e051,
title = "A Montero auction mechanism to regulate antimicrobial consumption in agriculture",
abstract = "Livestock production accounts for the lion's share of antibiotic consumption worldwide, and the sector is a significant contributor to antimicrobial resistance (AMR). Because farmers do not consider the contribution of their individual consumption of antibiotics to AMR, regulations are necessary to ensure optimal use. However, previously suggested regulatory instruments are either inefficient or nearly impossible to implement, mainly because they fail to address the information asymmetry that exists between farmers and regulators. In this article, we customize and suggest an efficient and incentive‐compatible regulatory instrument for antibiotic use based on the Montero auction mechanism (2008). We analytically and empirically demonstrate that the proposed auction mechanism is welfare improving as compared to current regulations. For the empirical analysis, we calibrate a simulation model for the Danish livestock sector based on farm accounts data for different types of livestock farms and combine it with calibrated demand functions for antibiotic allowances and a calibrated damage function. Based on the simulation results and the implementation of systems such as the Danish VETSTAT (a detailed accounting of farmers' antibiotic use), we anticipate that the proposed mechanism can be effectively used in the future.",
author = "Belay, {Dagim Gashawtena} and Abate, {Tenaw G.} and Jensen, {J{\o}rgen Dejg{\aa}rd}",
year = "2020",
month = "2",
day = "18",
doi = "10.1002/ajae.12079",
language = "English",
journal = "American Journal of Agricultural Economics",
issn = "0002-9092",
publisher = "Oxford University Press",

}

RIS

TY - JOUR

T1 - A Montero auction mechanism to regulate antimicrobial consumption in agriculture

AU - Belay, Dagim Gashawtena

AU - Abate, Tenaw G.

AU - Jensen, Jørgen Dejgård

PY - 2020/2/18

Y1 - 2020/2/18

N2 - Livestock production accounts for the lion's share of antibiotic consumption worldwide, and the sector is a significant contributor to antimicrobial resistance (AMR). Because farmers do not consider the contribution of their individual consumption of antibiotics to AMR, regulations are necessary to ensure optimal use. However, previously suggested regulatory instruments are either inefficient or nearly impossible to implement, mainly because they fail to address the information asymmetry that exists between farmers and regulators. In this article, we customize and suggest an efficient and incentive‐compatible regulatory instrument for antibiotic use based on the Montero auction mechanism (2008). We analytically and empirically demonstrate that the proposed auction mechanism is welfare improving as compared to current regulations. For the empirical analysis, we calibrate a simulation model for the Danish livestock sector based on farm accounts data for different types of livestock farms and combine it with calibrated demand functions for antibiotic allowances and a calibrated damage function. Based on the simulation results and the implementation of systems such as the Danish VETSTAT (a detailed accounting of farmers' antibiotic use), we anticipate that the proposed mechanism can be effectively used in the future.

AB - Livestock production accounts for the lion's share of antibiotic consumption worldwide, and the sector is a significant contributor to antimicrobial resistance (AMR). Because farmers do not consider the contribution of their individual consumption of antibiotics to AMR, regulations are necessary to ensure optimal use. However, previously suggested regulatory instruments are either inefficient or nearly impossible to implement, mainly because they fail to address the information asymmetry that exists between farmers and regulators. In this article, we customize and suggest an efficient and incentive‐compatible regulatory instrument for antibiotic use based on the Montero auction mechanism (2008). We analytically and empirically demonstrate that the proposed auction mechanism is welfare improving as compared to current regulations. For the empirical analysis, we calibrate a simulation model for the Danish livestock sector based on farm accounts data for different types of livestock farms and combine it with calibrated demand functions for antibiotic allowances and a calibrated damage function. Based on the simulation results and the implementation of systems such as the Danish VETSTAT (a detailed accounting of farmers' antibiotic use), we anticipate that the proposed mechanism can be effectively used in the future.

U2 - 10.1002/ajae.12079

DO - 10.1002/ajae.12079

M3 - Journal article

JO - American Journal of Agricultural Economics

JF - American Journal of Agricultural Economics

SN - 0002-9092

ER -

ID: 236263956