Monopoly pricing with negative network effects: the case of vaccines

Monopolpreisbildung mit negativen Netzwerkeffekten am Beispiel von Impfstoffen

Sebastian Kessing and Robert Nuscheler

Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center

Abstract: We study the market for vaccinations considering income heterogeneity on the demand side and monopoly power on the supply side. A monopolist has an incentive to exploit the external effect of vaccinations and leave the poor susceptible in order to increase the willingness to pay of the rich. Even the possibility to perfectly price discriminate does not remove this incentive. Pigouvian subsidies may even make things worse. Mandatory vaccination programs covering only the poor succeed in eradicating the disease. This offers an efficiency based rationale for distribution-oriented national or international public health interventions.

Keywords: Vaccination; monopoly pricing; price discrimination; negative network effects; Pigouvian subsidies; mandatory vaccination programs (search for similar items in EconPapers)
JEL-codes: D42 D62 H23 I11 I18 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Monopoly pricing with negative network effects: The case of vaccines (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmpg:spii200306

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