Optimal Vaccine Subsidies for Epidemic Diseases

Abstract

Abstract We analyze optimal vaccine subsidies in a model integrating disease epidemiology into a market with rational economic agents. The focus is on an intensive vaccine campaign to quell an epidemic in the short run. Across a range of market structures, positive vaccine externalities and optimal subsidies peak for diseases that spread quickly, but not so quickly that everyone is driven to be vaccinated. We assess the practical relevance of this peak—as well as the existence of increasing social returns to vaccination and optimality of universal vaccination—in calibrations to the Covid-19 pandemic.