Abstract
This study designs a theoretical model and simulation model that can explain the welfare impacts of disease transmission that occurs in livestock trade. A household production model and a SIR model are used to find theoretical profitable conditions for infectious livestock trading and prices and quantities for transactions. Under the theoretical conditions an agent-based model is used to simulate livestock transactions to compare social impacts based on the number of livestock, household wealth and income, and wealth inequality. Asymmetric information is used to assign tendencies of livestock trading agents. Buyers are assumed to be uninformed about the health status of livestock owned or used by sellers, while sellers are either uninformed for their herd’s health status, and if informed, the sellers’ behavior of selecting infectious livestock for transactions is divided into selfish selection and altruistic selection. The simulation results reveal that livestock losses are higher when trading occurs, but overall economic welfare tends to increase with trade. Interestingly, when sellers selfishly sell sick animals, average household wealth and income peak, albeit with greater wealth inequality.