Question

The parents who vaccinate their children get only a portion of the benefit from this vaccination. Parents of other children also gain because their kids are less likely to catch the disease when so many children are immune. Use marginal benefit and marginal cost curves to explain a decision by parents when they consider whether to have their children vaccinated against chicken pox. Be sure to have a curve for the parents’ marginal benefit from having their own children vaccinated as well as society’s marginal benefit.

Answer 1

Positive externality occurs when the consumption or production of a good causes a benefit to a third party. The producer is considered as the first party and the consumer is considered as second party. Here, the marginal social benefit exceeds the private social benefit.

Since parents who get their children vaccinated only gain a portion of the total benefit, which also includes benefit to other parents, vaccination has positive externalities.

For vaccines, positive externalities include herd immunity and reduced transmission of the disease. The ripple effect of positive externalities of vaccins can also be summed as follows: We start with a child who is vaccinated. Avoiding a host of childhood diseases, that child can benefit more from school and share her learning as a daughter, a worker and a mother.

It can be seen that social marginal benefit curve lies to right of private marginal benefit curve. The private marginal cost curve is rising as per its general nature.