Discuss how economics can solve the problem of AIDs in Africa.
I was thinking more along the lines of nationalising pharmaceutical companies/forcing them to provide AIDS drugs at the right prices for Africa. Can anyone tell me why they haven't done this?
Aids drug? Aids currently has no medicine as far as I know. Besides, prevention is better than cure.
No, AIDS drugs to extend the lifetimes of AIDS sufferers. Or HIV I can't remember. Either way, provide them at cheaper prices to Africa, thus opening up the market to people who are actually willing to pay the new prices and, for a while at least, solving the number one cause of deaths in Africa (I imagine that is AIDS). Once that is done, the workforce will be more productive, thus contributing to growth and higher income earnt. This actually provides an opportunity for African economies to do well and vaguely compete. As they get richer, they will be able to spend their own money on advertising campaigns and subsidising condoms, thus solving the problem. Pharmaceutical companies will be making more money by providing at cheaper prices to Africa because the size of the market will increase hugely. To prevent the cheap drugs flowing back to the States, clamp down on customs and threaten huge fines. If the governments try and steal all the money, we should invade and topple the regimes. After all, we invaded Iraq and Afghanistan for no reason, I'm sure Bush and Blair wouldn't have second thoughts about doing it again.
I dont know about that drug, but if it is present it is highly likely to be protected by patents, which will be very expensive to buy for an African country. So nationalisation may not work and private firms cant produce at such large quantities. They will prefer to supply less since the demand is quite inelastic I believe.
I want to read some Amartya Sen - what is his most famous work?
There's basically zero effective demand among the populace at the current price level. To reduce it to an affordable level in a country where the average income is $1 a day or less would simply not produce the kind of profits a pharmaceutical company is after.
I don't think that pricing at cost will bring them into the budget of most Africans. The only way to make the drugs affordable would be to sell below cost, making a loss on each unit sold. No sensible company will do that.
If governments get together and force the companies to produce at lower costs, the companies will tell them where to shove their regulation and either
a) Move to the Caymans
b) Stop researching altogether now they can no longer turn a profit