Fellows, KentHill, Alexia2023-12-082023-12-082023-05-29Hill, A. (2023). Two-part tariff: a method to induce firms to supply novel antibiotics in Canada (Unpublished master's project). University of Calgary, Calgary, AB.https://hdl.handle.net/1880/117691Canada does not have enough access to novel antibiotics to combat the growing threat of antibiotic resistance. This is due in part to short and long run market failures like externalities and market power from economies of scale. There are also imposed market restrictions on use, the stochastic nature of resistance, the interconnection to livestock and agriculture, and the patchwork drug coverage in Canada that further complicate the market. In this paper, I propose a subscription model, in the form a two-part tariff, to induce firms to develop and sell novel antibiotics in Canada. This model can financially incentivize firms by compensating them for the high fixed costs of research and development. The subscription model breaks the link between quantity and profits as the total fee is paid regardless of quantity used. The subscription fee can be determined using the expected value as an upper bound and producer profit, as determined through a rate of return calculation, as a lower bound.enUniversity of Calgary graduate students retain copyright ownership and moral rights for their thesis. You may use this material in any way that is permitted by the Copyright Act or through licensing that has been assigned to the document. For uses that are not allowable under copyright legislation or licensing, you are required to seek permission.Two-Part TariffSubscription ModelAntibioticsPrice Regulationreport