You are on a work integrated learning experience at Colgate-Palmolive Australia Head Office in Sydney. Over
a morning tea break you discover that you are not the only student working there from QUT. There are students
from a diverse range of undergraduate programmes including process engineering, business (majoring in
marketing, accounting, human resource management and advertising) and property economics. Everyone was
a bit bemused as to what the student from property economics was working on. They had secured a placement
assisting the finance team with asset valuation for the purposes of negotiating a better deal on insurance for
the commercial properties the company owns. All of you had one thing in common: you had studied BSB113.
One of the group walks over to the sink and notices a bottle of liquid antibacterial hand wash. They mention
that the US Food and Drug Administration (FDA) had banned several key chemicals which are in liquid and
bar antibacterial soaps including triclosan and triclocarban. Not everyone in the room understood the rationale
for the ban, but a quick google search (thank goodness for smart phones) pulls up a couple of articles. These
reported there were concerns from scientists that triclosan and triclocarban may be contributing to reduced
antibiotic resistance and the rise of so-called multidrug resistance bacteria (also sometimes referred to in the
media as superbugs) (Chettle, 2016 and Hartmann, 2017).
Someone in the group thinks that this is all just media hype and over-reaction. However, you happen to be a
bit of an expert (you had been following the Facebook page BSB113 Connected and it had piqued your interest
in a broad range of economic and social issues).You take the floor. You explain that antibiotic resistance is a
subset of a wider problem called Antimicrobial Resistance (AMR). Estimates of the costs of AMR, if it continues
on its present trajectory are 10 million deaths worldwide by 2050 (surpassing deaths from cancer) and costs
upwards of $100 trillion (Review on Antimicrobial Resistance, 2014).
The conversation then takes a different turn. It is time to play the blame game. In economics speak that is code
for analysing the economics behind the problem (e.g. what economic theories/model explain how we got to
this point). You mention that you remember that the lecturer in BSB113 had used a simple partial equilibrium
diagram to demonstrate how a negative externality in consumption would result in over consumption of a good
and an inefficient equilibrium above the socially optimal equilibrium. Someone in the group questions if it is in
fact a negative externality in production that is the appropriate economic model. A negative externality in
production also results in an inefficient equilibrium above the socially optimal equilibrium. Their rational is that
a key contributor to AMR is clinicians over-prescribing antibiotics (Van Boeckel, et al., 2014). A discussion
follows and it is concluded that the clinician is effectively an agent for the patient. That is, the clinician
prescribes a drug to be consumed by a patient and this is captured in the demand curve.
Next, the discussion turns to policy solutions. You add more information to an already complex problem.
Antibiotic over-consumption extends further than clinical prescriptions of antibiotics to humans. It is estimated
that over one-half of the antibiotics consumed in the U.S. are in food animal production (Alliance for the Prudent
Use of Antibiotic, 2012). Someone notes that this does not change the economic model, but it does mean that
policy solutions to move the market in antibiotics to a socially efficient level of consumption will be different
depending on which subset of “consumers” the policy is targeted at (OECD, 2016).
Your musings were overheard by the visiting Johnson and Johnson CEO. The CEO was impressed by your
insights and has asked that you write him an economic analysis of the over consumption of antibiotics.