Vaccination Externalities

Boulier, Bryan L.; Datta, Tejwant S.; Goldfarb, Robert S.

doi:10.2202/1935-1682.1487

Cited by 52 publications

(67 citation statements)

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“…A common way of modeling externality is to assume a constant marginal externality, α, implying that the externality benefit equals α × min[D(p), q]. Such an assumption is embedded in many practical studies by various governments, World Bank, WHO [8], as well as in theoretical works, e.g., [34]. It also holds for the environmental externality that our application considers: Using an EV instead of a regular vehicle is decreasing air pollution proportionally to the number of EVs.…”

Section: Modelmentioning

confidence: 99%

“…and α < c − B/2 then the optimal retail price and stocking factor are 8 IFR assumption is common in the analysis of newsvendor models and holds for the uniform, normal and other commonly used distributions. The condition on the density function in this and following lemmas is a technical sufficient condition to guarantee optimality.…”

Section: A Centralized Case: Optimizing Social Welfarementioning

confidence: 99%

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Coordinating Pricing and Supply of Public Interest Goods Using Government Rebates and Subsidies

Raz

Овчінніков

2015

IEEE Trans. Eng. Manage.

162

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This paper presents a stylized framework for analyzing the design of government incentives for public interest goods (goods with externalities, such as electric vehicles.) We extend the newsvendor model with pricing to account for the consumption externality inherent in public interest goods and analyze the governments ability to coordinate their pricing and supply through the use of rebates and subsidies. Our model allows for goods with both positive and negative externalities, and considers three government intervention mechanisms: the joint mechanism that uses both subsidies and rebates, and two simplified mechanisms that use only rebates or only subsidies. The goal of the intervention is to coordinate the system in order to achieve the maximal welfare, which in our model consists of the firms profit, consumer surplus, and externality benefit net the government cost. We find that the joint mechanism coordinates the system, but results in a negative subsidy (i.e., a tax) unless the externality is very small. The simplified mechanisms mostly result in positive rebates and subsidies, but generally do not coordinate the system. We apply our model to the case of Chevy Volt, a leading electric vehicle in North America manufactured by General Motors. We estimate all model parameters from industry data and present a comprehensive numerical study that compares the current government incentives with those suggested by our model. We find that while the current incentives are structurally suboptimal, the resultant welfare loss under the rebate-only mechanism is very small, while under the subsidy-only mechanism it is quite large.

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Section: Modelmentioning

confidence: 99%

Section: A Centralized Case: Optimizing Social Welfarementioning

confidence: 99%

Coordinating Pricing and Supply of Public Interest Goods Using Government Rebates and Subsidies

Raz

Овчінніков

2015

IEEE Trans. Eng. Manage.

162

View full text Add to dashboard Cite

show abstract

“…Most of these mathematical economic-epidemiology models tend, however, to make fairly restrictive assumptions (for example, the vaccine is 100 percent effective with unlimited duration, and in Francis [1997] no one in the population ever dies). Boulier, Datta, and Goldfarb (2007) use an SIR framework coupled with an analytical economic framework to provide empirical estimates of externalities in measles and influenza vaccination, and show how the magnitude of externalities varies with infectiousness parameters, the number of vaccinations, and the efficacy of vaccination. Another key theoretical insight is a call for standard mathematical models to account for agents' reactions to rising (or falling) prevalence (Geoffard & Philipson, 1996;Kremer, 1996;Philipson, 2000).…”

Section: Using Private Demand Studies To Calculate Socially Optimal Vmentioning

confidence: 99%

Using private demand studies to calculate socially optimal vaccine subsidies in developing countries

Cook

Jeuland

Maskery

et al. 2008

J Policy Anal Manage

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Although it is well known that vaccines against many infectious diseases confer positive economic externalities via indirect protection, analysts have typically ignored possible herd protection effects in policy analyses of vaccination programs. Despite a growing literature on the economic theory of vaccine externalities and several innovative mathematical modeling approaches, there have been almost no empirical applications. The first objective of the paper is to develop a transparent, accessible economic framework for assessing the private and social economic benefits of vaccination. We also describe how stated preference studies (for example, contingent valuation and choice modeling) can be useful sources of economic data for this analytic framework. We demonstrate socially optimal policies using a graphical approach, starting with a standard textbook depiction of Pigouvian subsidies applied to herd protection from vaccination programs. We also describe nonstandard depictions that highlight some counterintuitive implications of herd protection that we feel are not commonly understood in the applied policy literature. We illustrate the approach using economic and epidemiological data from two neighborhoods in Kolkata, India. We use recently published epidemiological data on the indirect effects of cholera vaccination in Matlab, Bangladesh (Ali et al., 2005) for fitting a simple mathematical model of how protection changes with vaccine coverage. We use new data on costs and private demand for cholera vaccines in Kolkata, India, and approximate the optimal Pigouvian subsidy. We find that if the optimal subsidy is unknown, selling vaccines at full marginal cost may, under some circumstances, be a preferable second-best option to providing them for free.

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“…Taken together, Assumptions 1 and 2 imply that t ≤ r ⇒ pðtÞ ≥ q; t ≥ r ⇒ pðtÞ ≤ q: [5] This knowledge of the external-response function is much weaker than the traditional assumption that the planner knows the function. Moreover, Assumptions 1 and 2 often are credible.…”

Section: Vaccination With Partialmentioning

confidence: 99%

“…Economists have also studied optimal criminal justice systems under the assumption that the planner knows how policing and sanctions affect crime rates (2). Researchers studying optimal vaccination against infectious disease have typically assumed the planner knows how vaccination affects illness rates (3)(4)(5)(6)(7)(8)(9).…”

mentioning

confidence: 99%

Vaccination with partial knowledge of external effectiveness

Manski

2010

Proc. Natl. Acad. Sci. U.S.A.

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Economists studying public policy have generally assumed that the relevant planner knows how policy affects population behavior. Planners typically do not possess all of this knowledge, so there is reason to consider policy formation with partial knowledge of policy impacts. Here I consider choice of a vaccination policy when a planner has partial knowledge of the effect of vaccination on illness rates. To begin, I pose a planning problem whose objective is to minimize the utilitarian social cost of illness and vaccination. The consequences of candidate vaccination rates depend on the extent to which vaccination prevents illness. I study the planning problem when the planner has partial knowledge of the external-response function, which expresses how the illness rate of unvaccinated persons varies with the vaccination rate. I suppose that the planner observes the illness rate of a study population whose vaccination rate has been chosen previously. He knows that the illness rate of unvaccinated persons weakly decreases as the vaccination rate increases, but he does not know the magnitude of the preventive effect of vaccination. In this setting, I first show how the planner can eliminate dominated vaccination rates and then how he can use the minimax or minimaxregret criterion to choose an undominated vaccination rate. Economists and other researchers performing normative study of public policy have typically assumed that the policy maker, or planner, knows how policy affects population outcomes. A standard exercise specifies a set of feasible policies and a social welfare function. The planner is presumed to know the welfare achieved by each policy. The objective of the exercise is to determine the optimal policy.There are many examples. Economists have studied optimal income taxation under the assumption that the planner knows how the tax schedule affects the population distribution of labor supply (1). Economists have also studied optimal criminal justice systems under the assumption that the planner knows how policing and sanctions affect crime rates (2). Researchers studying optimal vaccination against infectious disease have typically assumed the planner knows how vaccination affects illness rates (3-9).Whatever the policy choice may be, inferential problems commonly make it difficult to learn how policy affects outcomes. Perhaps the most fundamental difficulty is the identification problem arising from the unobservability of counterfactual outcomes. At most one can observe the outcomes that occur under realized policies-the outcomes of unrealized policies are logically unobservable. Yet determination of an optimal policy requires comparison of all feasible policies. For this and many other reasons, planners usually have only partial knowledge of the welfare achieved by alternative policies. This limits the relevance of the standard exercise to actual policy analysis.This paper considers choice of a vaccination policy when a planner has partial knowledge of the effect of vaccination on illness rates. There ...

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Vaccination Externalities

Cited by 52 publications

References 0 publications

Coordinating Pricing and Supply of Public Interest Goods Using Government Rebates and Subsidies

Coordinating Pricing and Supply of Public Interest Goods Using Government Rebates and Subsidies

Using private demand studies to calculate socially optimal vaccine subsidies in developing countries

Vaccination with partial knowledge of external effectiveness

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