FACED WITH COVID-19, IS THERE A MARKET FAILURE IN PUBLIC HEALTH, AND SHOULD THE GOVERNMENT ADOPT A FREE TREATMENT POLICY?----EVIDENCE FROM CHINA

ABSTRACT

This paper uses text mining to model 21,403 Chinese news items related to the free treatment of the new coronavirus disease (COVID-19) and constructs China’s free treatment policy index, which overcomes the difficulty a short data time span poses to in-depth analysis on the economic impact of public health emergencies. In addition, the causal network model is selected to study 52 listed companies in the health industry to test whether there is market failure in the field of public health and the effect of intervention measures. The study found that if the government only relies on market regulation and monetary policy (such as interest rate policy and exchange rate policy), market failure will emerge in the public health sector, yielding an increase in the number of infected people. Therefore, on the basis of market self-regulation, the government should use not only monetary policy but also free treatment policy to make up for the market failure in the public health sector, control the spread of COVID-19 and promote the development of the health industry. © 2022, Bucharest University of Economic Studies. All rights reserved.