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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jhealeco.2005.09.006 Byline: Pierre Lasserre (a), Jean-Paul Moatti (b), Antoine Soubeyran (c) Abstract: Criteria for initiation of highly active antiretroviral treatments (HAART) in HIV-infected patients remain a matter of debate world-wide because short-term benefits have to be balanced with costs of these therapies, and restrictions placed on future treatment options if resistant viral strains develop. On the other hand, postponing the introduction of HAART may involve a therapeutic opportunity cost if a patient's health is allowed to deteriorate to such an extent of becoming unable to benefit from new treatments currently under development when they become available. We introduce a two period model where period one treatment adoption is an irreversible act with future, but uncertain, consequences. New information, both endogenous and exogenous, arises over time and shapes the conditions surrounding the second period therapeutic decision. A surprising result is that, under conditions that appear close to those surrounding the HAART debate, the magnitude of the feared resistance effect has no effect on leaves the optimal treatment decision as far as it is high enough. JEL classification: I18; C61 Keywords: Therapeutic decisions; Uncertainty; Information; Irreversibility; Treatment Resume Le bien-fonde d'administrer precocement des traitements antire troviraux a haute activite (HAART) aux personnes infectees par le VIH reste objet de debats dans le monde car leurs bienfaits a court terme peuvent compromettre les traitements futurs si se de veloppent des souches resistantes du virus. Par ailleurs retarder le recours aux HAART comporte un coA't d'opportunite therapeutique si la sante du patient se degrade au point qu'il ne peut plus ben eficier par la suite des traitements encore en cours de de veloppement. Nous formulons un modele a deux periodes oA[sup.1] l'adoption du traitement de premiere periode est irreversible et engage le futur, alors que des informations et connaissances nouvelles, exog enes et endogenes, determinent les conditions entourant la de cision therapeutique de deuxieme periode. Paradoxalement, sous des conditions refletant bien les enjeux du recours aux HAART, il s'av ere que l'effet resistance eventuel a d'autant moins de chance d'importer pour la decision optimale, que sa gravite est elev ee. Author Affiliation: (a) Departement des sciences economiques, Universite du Quebec a Montreal, CIRANO, GREQAM, France (b) Faculte d'economie et gestion, Universite de la Me diterranee, GREQAM, INSERM Research Unit 379, France (c) Departement des sciences economiques, Universite de la Mediterranee, and GREQAM, Rte des Milles, 13290 Les Milles, France Article History: Received 1 January 2001; Revised 1 January 2003; Accepted 1 September 2005

They examine optimal conservation decision given that a biodiversity loss is irreversible and that future use values are uncertain. While species substitutability has been shown to reduce the value of diversity, they show that the flexibility is associated with substitutability. The irreversibility that characterizes options creates convexity in value, which explains why increased volatility means increased values; instead volatility and expected return are substitutes in a standard portfolio model.

Individuals from different society have different productive abilities and encroachment abilities. Every producer has a complete control over marginal product since production is not collective.

Capacity choice as the exercise of a financial call option. This paper is one of the first attempts to verify the validity of option theory, as applied to real investment, by confronting the theory with empirical observations. We use capacity investments by Canadian copper mines. One major difficulty in transposing the financial theory of options to real investment is the fact that real investments and, more generally, several characteristics of the projects, depend in general on the date at which the investment is undertaken. We have partially endogenized these elements using econometric results relating capacity decisions with a number of time-dependent explanatory variables. Under a number of simplifying assumptions, we were then able, using the option pricing model, to compare the value of investment projects in the periods preceding their effective realization with the trigger value above which theory called for the project to go ahead. We have found that the firms in our sample acted in conformity with option theory in 60 per cent of the cases. This figure rises to 80 per cent (90 per cent) if we consider cases where investment actually occurred within one (two) year(s) of the date predicted by the theory. While we do not offer any statistical test of the validity of the theory, these results appear to speak in its favour.

A research study examined the effects of taxation on the capacity choices of Canadian copper mines. Emphasis was placed on the establishment of plants and significant changes in capacity. The analysis shows that capital costs change when using flexible neoclassical technologies in terms of how resource rent components are used in the formula. Econometric results demonstrate how prices that result from taxation affects capacity choice. The influence of tax characteristics are also identified.

Papers by Olsen and by Cairns and Lasserre analyze equilibrium in a resource industry where deposit quality varies and where extraction requires capital investment. The papers substantially qualify the conventional understanding of such matters as the form of Hotelling's rule, the role of deposit size, the simultaneous extraction from deposits of different quality, and the price path. The argumentation, however, is intricate and the crucial role of investment as such is not easily distinguishable. We clarify the intuition behind the results, bring out the role of the various assumptions, and raise important remaining issues.

Multi-factor productivity measurement requires information on returns to scale and internal valuations of such quasi-fixed factors as resource inputs. We estimate a translog cost function for the asbestos industry in Canada, and find significant induced technological change and returns to scale. The shadow rental price of reserves is significant and drops sharply after 1975. The productivity index based on the estimated model sharply differs from the Divisia index, as computed from direct measurements under the assumption of constant returns to scale and ignoring the role of the resource as an input.