Estimating the Price Elasticity of Antibiotics in Swedish Pig Farming

Abstract

Antimicrobial resistance (AMR) is a serious threat to global health and development. If left unaddressed, AMR could cause 10 million deaths annually by 2050, and an economic loss of $100 trillion. A major contributor to AMR is the use of antibiotics in livestock, which accounts for 73% of global antibiotic consumption. Many countries have introduced regulations on antibiotic use, and an antibiotic tax has also been proposed. Evaluating such a policy requires reliable estimates of the price elasticity of demand for antibiotics - data that remains scarce. This thesis examines antibiotic use in Swedish pig production and applies an ARDL model to estimate short- and long-run price elasticities. Significant positive and negative elasticities are found across commonly used antibiotics, analysed by specific product-package size combinations. These findings suggest that in Sweden - a country with already stringent regulations and a cautious approach to antibiotics - a tax would likely have limited effectiveness in further reducing use, but the tax revenue could contribute to the development of new antibiotic drugs.