Answer to Question #283676 in Microeconomics for giahue

Question

1. Use your knowledge of externality and relevant models to examine the impact of inadequacies of the vaccine on the market outcomes.
2. Discuss appropriate government intervention to achieve a socially efficient vaccination volume.

Answer 1

1) Inadequacies of the vaccine is an example of negative externalities in the market. The unvaccinated population pose a greater risk to the society through continued spread of the virus which will lead to markets being closed down. The vaccinated population is an example of positive externality on the other hand since those who are vaccinated are protected, and if enough people are vaccinated then others are less likely to contract the disease so they benefit from vaccinations even if they themselves aren't vaccinated.

2) Achieving a socially efficient vaccination volume, the government has to ensure that public trust is being gained by the population. The most crucial challenge for failure of vaccination is public trust as people are not trusting the vaccines. The government should ensure that they proactively release timely information on the vaccination strategies and modalities, ensuring they provide transparent public information to address the misinformation in the public space. They should also promote fairness by managing public expectations as to why some particular population groups within a country are prioritised for vaccination.