Ebola Responses & Institutional Differences

Ebola spreads because of a lack of organized health institutions. NPR recently reported on the health outcomes at Firestone’s rubber plantation in Harbel, Liberia, which has been successful in containing the disease, and on Reddit, a user explains one important part of the economic story that is left out:

A fascinating situation; Firestone was able to avoid the normal externality problems inherent in communicable diseases by fully internalizing the externality through clear property interests in having the town continue functioning. Other communities might always run into the tragedy of the commons problem where no coordinated response can occur because no one is willing to take risk in setting up quarantine areas or be able to enforce them. Additionally:

The Firestone managers had the benefit of backing and resources of a major corporation — something the communities around them did not.

This isn’t just a case of rich western company vs poor downtrodden third world citizens; the problem in Liberia is a lack of advanced infrastructure. Without that, fighting ebola is much more difficult. But in this town, while it’s true that there is backing and resources, there are also good incentive structures. The market pushed a private company to invest in infrastructure, and the value of the assets in Harbel meant that Firestone’s and the community’s incentives were aligned which made this such a success story.

First published Oct 7, 2014