Coasian Solutions to Vaccines

 The recent political turmoil over COVID vaccines provides a good link between the Friedman reading and our current analysis of the Coase Theorem. Friedman wrote that “the use of political channels, while inevitable, tends to strain the social cohesion essential for a stable society. The strain is least if agreement for joint action need be reached only on a limited range of issues” (23). Clearly, the use of government vaccine mandates (regardless of your stance on them) relates intimately to this. The use of political channels to mandate vaccines was an instance of forced conformity that led to enormous strain on the social fabric: a host of papers have been investigating the increase in political polarization and other unintended consequences of the mandates. Please find two linked below.

https://gh.bmj.com/content/7/5/e008684

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4022798

Coasian solutions to vaccines may have been more prudent and may be more attractive in similar scenarios in the future. But what would such solutions look like? This is an instance of a positive consumption externality. It seems clear first of all that the "property rights" in this scenario belong to those against the vaccine (the non-vaccinated)—as free citizens, they have legal sovereignty over their bodies. Therefore, the burden would be on those affected (the pro-vaccine) to entice the non-vaccinated to receive the vaccine. It at least plausible that the pro-vaccine group could privately extend compensation to the non-vaccinated group and entice all or most of them to receive the vaccine.

Some clear problems must be taken into account, however. The PMB of a vaccine is likely very low for the non-vaccinated (since they have no desire to receive it), and the SMB is likely very high (since it will protect society from disease). If these two assumptions are correct, then the EB in this scenario is going to be quite large. This means that paying the non-vaccinated to receive the vaccine could ultimately be a very expensive undertaking, since the price each vaccine is worth to the pro-vaccine group is about the value of the EB. Moreover, the non-vaccinated generally are so because of deep-seated political or religious beliefs. This means that convincing them will take an enormous amount of negotiation and compensation (if they are even willing to compromise at all). Lastly, as Gruber mentions repeatedly in the reading from chapter 5, there would be a host of difficulties with conducting negotiations when the issue exists on such a large national (or even international) scale and involves so many individuals (both non-vaccinated and pro-vaccine).