An Economic Framework for Vaccine Prioritization
52 Pages Posted: 17 May 2021 Last revised: 28 Feb 2023
Date Written: February 26, 2023
We propose an economic framework for determining the optimal allocation of a scarce supply of vaccines that become gradually available during a public health crisis, such as the Covid-19 pandemic. Agents differ in observable and unobservable characteristics, and the designer maximizes a social welfare function over all feasible mechanisms---accounting for agents' characteristics, as well as their endogenous behavior in the face of the pandemic. The framework emphasizes the role of externalities and incorporates equity as well as efficiency concerns. Our results provide an economic justification for providing vaccines immediately and for free to some groups of agents, while at the same time showing that a carefully constructed pricing mechanism can improve outcomes by screening for individuals with the highest private and social benefits of receiving the vaccine. The solution casts light on the classic question of whether prices or priorities should be used to allocate scarce public resources under externalities and equity concerns.
Keywords: COVID-19, vaccination, mechanism design, inequality
JEL Classification: C78, D47, D61, D63, D82
Suggested Citation: Suggested Citation