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Negative network effects in vaccinations


Many consumer companies, such as Apple, Facebook, and Google, offer products that have positive network effects. In other words, Facebook is more compelling to potential users, including Harvard undergraduates, today than it was when it was limited to only Harvard undergraduates. Its nature as a social networking tool makes it more valuable the more people are connected to the service. Many products work in this way even at an implicit level; the appearance of fads is explained by the sudden rise in adoption of a product sometimes simply due to other people have adopting it as well. On the other hand, some specialty goods lose potential value when a larger portion of the population uses it; when a cult favorite goes mainstream, it suddenly loses much of its appeal.

This property of positive and negative network effects can also be applied to non-consumer goods as well, such as vaccines. In the perspective of the whole society and public health representatives, the optimal vaccine coverage is 100%. If the entire society is vaccinated, the risk of outbreak is minimized. However, for the individual actors who must receive and pay for the vaccination either directly or indirectly through insurance companies, there is a cost for these vaccinations, whereas the benefit is a reduction in risk of contracting the disease. However, as the fraction of individuals that are vaccinated increases, the chance of contracting an infection decreases. Therefore the value of the vaccination decreases which may result in a lower-than-optimal vaccine coverage. This is indicative of the negative network effect; as a consequence, a free market, voluntary vaccination program without any government incentives will not be enough to achieve optimal vaccination coverage unless the cost of the vaccination is very little or the value of the vaccination is very large.


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