| Popis: |
This thesis analyzes spillover effects and pricing incentives in vaccine markets. I build a theoretical model to incorporate spillovers from vaccination into the demand curve of vaccines. Then, I apply the model to three price-setting mechanisms (Profit Maximization, Social Surplus Maximization, and Nash Bargaining) to calculate the equilibrium price and market share under each. Through mathematical proof, four key findings can be drawn from this thesis: (1) The private demand for vaccines decreases and becomes less elastic given the spillover effect. (2) Profit maximized market shares continuously shrink as the spillover effect gets stronger. (3) Social optimal prices fall and stay below the marginal cost for all with spillover cases. (4) Bilateral bargaining (Nash Bargaining) is a better approach than direct purchases (Profit Maximization) to acquire vaccines from a monopoly firm, attributing to higher market power gained by the government (as a representative of consumers) in the negotiation; Nash Bargaining can internalize the spillover-related changes in prices and market shares from two other mechanisms. |
