External Benefits

What can the flu teach us about economics and externalities? In this video, we go over how vaccines produce positive externalities that help people stay healthy. When someone receive the vaccine, they pass along the positive benefits of the vaccine to others, generating positive externalities. However, when someone gets a vaccine, they bear all of the costs and only reap some of the benefits of the vaccine. The social value is larger than the private value, resulting in an an undersupply of flu shots. One solution to this problem is a Pigouvian subsidy — a subsidy on a good with external benefits.

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[khemrajsedhai]

For the students who do not have a previous background in economics, the lessons are really helpful. Thank you!!!

[JyotiSingh-xukn]

I thought let's give this video a chance and I must say you guys are awesome. I was sleepy and was just listening for the sake of it but I understood and I am thankful!!

[mr.johnson]

this intro music will give me nightmares for years to come.

[collegeguy]

wow I just found out about your channel. The book we are using has a lot of complexity to it and makes learning at times super vague. You guys made it really easy. Thank you!

[visarberisha]

Shouldn't the social value curve (red line) have a steeper slope and eventually join the private value curve at the end because the last person in a population receiving a vaccine would not provide any social benefit?

[EightToneSpanish]

Possibly a silly question, but if you subsidise by the external cost then won't you just balance a "societal deadweight loss" as shown in the video with a government induced deadweight loss?
i.e. the triangle between the efficient equilibrium, old market equilbrium & where the blue demand curve crosses the dotted line near Q efficient.

This subsidy, does it get divided in the same way as a normal subsidy with some going to producers and some to consumers?

Is there not infact a new Pmarket where the Demand (private value) crosses the dotted line. Effetively this good here will become almost free.

[robindragirl]

YOU SOOO MUCH. YOU GUYS ARE THE BEST!!

[eriknystrom]

How can it be more efficient for the consumer ? Because the new price will be a bit higher but will be subsidized to the inicial price right? So the consumer will still pay the same price as before? But with a higher quantity is doesnt seem logical.. Just my thoughts.

[alisab]

Thank you so much, this video was very helpful. You guys are the best.

[drmksharma]

India giving free Covid-19 vaccine shots to its citizens, good example of Pigouvian subsidy being used in practice

[reginy-sr]

Alas! A system error resulted in the transaction being sent to an invalid email address!

[shashankgupta]

In the graph at 5:30, When we give subsidy, will the price paid by the consumer for the flu shots be P(efficient)- subsidy or P(market)-subsidy ??
Thanks for such informative video

[guilhermeadan]

really nice to have practice questions too