Immunisation rates have been increasing in Australia over the years. Presently, the country has recorded about 70 percent of children being vaccinated in Australia. This rate is quite low than other developed countries and has been a major issue for the government fo Australia. Immunisation has been one of the troubled issues of the world as well because of 1.5 million children dying every year due to lack of vaccination (Mahajan, et al., 2015). Immunisation rate is as high as 90 percent in some developed countries such as North America and as low as 42 percent in sub-Saharan Africa. Such low rate in some countries makes them lose the external benefits acquired from this system because the children are dying in an increasing rate. Good immunisation saves the children from getting sick and helps them lead a good life. These children are going to grow up with good health and will work for the benefit of the country and give high productivity. Thus, bad immunisation system causes external cost for the country and the society (Denholm & McBryde, 2014).
There are many market failure attach to the consumption of immunisation. This is because a lot of market failure is caused due to positive consumption externality. This is because the social benefit is caused due to the free availability of goods. More social benefit and free market price means that everyone is getting the benefit (Rios, McConnell, & Brue, 2013). People not getting immunised also benefits from those getting themselves immune. This is because the whole population benefits from the improved health condition. Thus, this reduces demand and increases the amount of social benefits above the private benefits creating market failure. This is because the social benefit of consumption is more than the private benefit. It can be seen from a diagram:
From the above diagram, it can be seen that marginal social benefits is more than the marginal private benefit. The immunisation is offered free of cost; however, due to lack of knowledge it is being charged by the private companies. People are being vaccinated by paying high price to the people. Moreover, it can be seen that even though the price of immunisation is free the private companies charge the vaccination price at P1. This is because the demand for vaccination is low due to high social consumption externality and people those are getting immunised have to pay more money to the profit making private companies. Further, it is also due to the inadequate allocation of resource. These factors together causes market failure in the economy, which is denoted by the shaded triangle in the figure. Thus, it is necessary for the government to take necessary steps to reduce the market failure caused due to inadequate vaccination in a economy
The lack of immunisation in Australia and increasing positive consumption externalities compared to other developing countries has forced the government to take steps to improve the condition (Hsu, Matsa & Melzer, 2014). The government has decided to reduce the family tax benefit for the people to encourage them to get their children benefitted. This is because with the fear of losing the tax benefit amount every family will give importance to immunisation to their children at right time. The government to reduce the amount of market failure caused due to immunisation did this. This is because increased market failure is costing high for the people getting immunised (De Agostini, et al., 2014). The levy of policy for reducing the family positive tax benefits will force the people to get their children immunised in order to get the adequate amount of money from the tax benefits policy. This is because tax benefit is given to the family for maintaining the health of the children. Further, the reduction of tax benefit is done to increase the demand and shifting it to the right. Thus resulting in social optimal level of production and an optimal price level. Moreover, an efficient allocation of resources and efficient equilibrium also occurs due to this step by the government (Lefebvre, Terlinden & Standaert, 2014).
The step taken by the government can prove to be a failure in creating more demand for immunisation and thus inability of the demand to move rightward. This is because people might think in a other way that the government is not offering them facilities and more and more people might back off from getting immunised. Thus, instead of getting an increase in demand there will be a decrease in demand causing further market failure. However, government can take different step such as offering subsidies to the people (Ochieng & Hobbs, 2015). This will reduce the cost to the consumer compared to the amount the producers will receive. Amount of subsidy given might increase demand more than expected as consumers will gain trust towards the government and get it at less cost. Thus, the demand curve will shift right causing an increase and market failure will decrease. It will also cause social optimal price and optimal allocation of resources. In addition to this, it should be remembered that in order to get their policy effective the consumers should be educated about it. Most of the lack in demand for immunisation is due to lack of proper information and knowledge. Thus, in order to get their policy right the government should deal with the problem of asymmetric information among the people about immunisation and its benefits. These are the ways a policy to increase demand and reduce the market failure caused due to increased positive consumption externality can be successful (Huo, et al., 2014).
From the above analysis, it can be deduced that Australia has been increasing the rate of immunisation among its citizens. However, the rate is less than some well-developed country. Moreover, the free market price and positive externality caused by immunisation lead to market failure in the economy. This is because the social benefit caused by immunisation not only safeguards the people getting it done. It also benefits the society as a whole. Thus, many people escape from taking the vaccination and enjoys at the cost incurred by others. This leads to a reduction in the demand for immunisation and causes market failure. Thus to increase the demand and reduce the market failure problem the government decides to reduce the rate given on the family benefit program. According to the government this might encourage people to take vaccination. However, it is shown that it might also lead to market failure by government called as government failure by making an opposite effect on the people. Thus, for better immunisation it needs to think about other beneficial plans.
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