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Vaccination equilibrium: Externality and efficiency

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  • Ma, Ching-to Albert

Abstract

I study individual consumers’ choices of getting vaccinated. A vaccine reduces the severity of an infectious illness, but may produce side-effects and other disutilities at the time of administration. Such private benefits and disutilities vary across consumers in the population. The infection probability depends negatively on the total mass of vaccinated consumers. This is an externality. One consumer’s vaccination choice has negligible contribution to the total mass of vaccinated consumers. Consumers do not internalize the externality. I characterize a unique Vaccination Equilibrium, the sustainable vaccination mass resulting from individual decisions. I show how vaccine improvements in benefits, side-effects, and infection likelihood change the Vaccination Equilibrium. The first-best or efficient vaccination mass takes into account the externality and consumers’ benefits and costs. The unique Vaccination Equilibrium is never first best. Taxes, subsidies, and mandates may change the Vaccination Equilibrium.

Suggested Citation

  • Ma, Ching-to Albert, 2024. "Vaccination equilibrium: Externality and efficiency," Socio-Economic Planning Sciences, Elsevier, vol. 95(C).
  • Handle: RePEc:eee:soceps:v:95:y:2024:i:c:s0038012124002003
    DOI: 10.1016/j.seps.2024.102001
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    References listed on IDEAS

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    1. Krishna Dasaratha, 2020. "Virus Dynamics with Behavioral Responses," Papers 2004.14533, arXiv.org, revised Sep 2023.
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    More about this item

    Keywords

    Vaccination; Equilibrium; Externality; Efficiency; Free-riding; Vaccine costs and benefits; Infection;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • H00 - Public Economics - - General - - - General

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