Antimicrobial resistance as an economic externality: optimal control, Pigouvian taxation, and governance implications

The rise of antimicrobial resistance (AMR) is a major concern worldwide, with serious implications for health and the economy. Global burden estimates, coupled with mortality projections for 2019, indicate that antimicrobial-resistant infections will cause large-scale deaths and massive economic losses by 2050. AMR is not only about health; It is an economic externality created by misaligned incentives in health, agriculture, and trade.

We present a dynamic endogenous model that captures the interplay among antibiotic use, resistance evolution, and social costs. Optimal fiscal interventions are identified and evaluated using simulation scenarios based on European data, with particular attention to the impact of diverting tax revenue to stewardship and diagnostics.

The models demonstrate that, under optimal social conditions, antibiotic use should be reduced by 8.6% relative to private use levels. The combination of around $\$0.775$ per dose with the Pigouvian tax can be used as a diagnostic and stewardship investment to adjust incentives and build public health power.

The study makes a distinct contribution by explicitly incorporating revenue recycling into a dynamic Pigouvian framework, thereby supporting the idea that self-governance benefits from AMR taxation. The solution is then coordinated toward long-term economic planning with intervention in biomedicine against AMR.