Vaccination equilibrium: Externality and efficiency

I study individual consumers' choices of getting vaccinated. A vaccine reduces the severity of an infectious illness, but may produce side-effects and other disutilities at the time of administration. Such private benefits and disutilities vary across consumers in the population. The infection probability depends negatively on the total mass of vaccinated consumers. This is an externality. One consumer's vaccination choice has negligible contribution to the total mass of vaccinated consumers. Consumers do not internalize the externality. I characterize a unique Vaccination Equilibrium, the sustainable vaccination mass resulting from individual decisions. I show how vaccine improvements in benefits, side-effects, and infection likelihood change the Vaccination Equilibrium. The first-best or efficient vaccination mass takes into account the externality and consumers' benefits and costs. The unique Vaccination Equilibrium is never first best. Taxes, subsidies, and mandates may change the Vaccination Equilibrium.