Optimal tax/subsidy combinations for the flu season

This paper uses a dynamic susceptible-infected-recovered (SIR) epidemic model to identify optimal vaccination policy mixes for the flu season. It begins with the solution to the relevant optimal control problem and then gives the derivation of a perfect-foresight equilibrium outcome for vaccination behavior in an unregulated market. Both the optimal and market outcomes are characterized by switching curves in S-I state space; exact expressions for these are derived. The final section discusses taxes and subsidies that can be used to attain the optimal outcome. (C) 2003 Elsevier B.V. All rights reserved.