Job Market Practice Talk: Shu-Chen Tsao, University of California, Santa Barbara

Speaker

Shu-Chen Tsao, University of California, Santa Barbara

Title

Innovation and Adaptation to Expanding Biological Threats

Abstract

Developed countries often possess the capacity to innovate technologies that mitigate global biological threats, such as vaccines for infectious diseases, but invest little when not directly exposed. I develop a spatial dynamic game where all countries control biological threats, while only a few can additionally innovate technologies. The model captures transboundary diffusion of biological threats, technology spillovers, and strategic interactions. When threat exposure rises in innovation-capable countries, incentives to innovate diverge sharply—driven not by threat severity but by the underlying biological features. For threats with biological features that make sustained eradication through control optimal, greater exposure fails to spur innovation. For others, innovation emerges endogenously, and I provide a framework to estimate its magnitude. Using evidence of dengue-transmitting mosquitoes expanding into the U.S., I estimate that endogenous U.S. vaccine innovation could reduce dengue cases in the Americas by 54% relative to a no-innovation response scenario after the expansion, and I assess the resulting welfare implications.