Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets?
Prior research suggests that, to maintain sustainable health, inefficient vaccine markets need to be intervened by government subsidy. However, the effectiveness of these intervention mechanisms is often reduced by the absence of reference dependence preference. Our paper introduces this preference...
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doaj-bd7d9d8191a44dfca7b36e5f917e6e1d2020-11-25T03:57:24ZengMDPI AGSustainability2071-10502020-08-01126371637110.3390/su12166371Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets?Feiyu Guo0Erbao Cao1College of Economics and Trade, Hunan University, Changsha 410079, ChinaCollege of Economics and Trade, Hunan University, Changsha 410079, ChinaPrior research suggests that, to maintain sustainable health, inefficient vaccine markets need to be intervened by government subsidy. However, the effectiveness of these intervention mechanisms is often reduced by the absence of reference dependence preference. Our paper introduces this preference as the psychological disutility of overproduction and underproduction, and then uses game-theoretic way to find that reference dependence has implications on one-sided (pure demand or supply side) and two-sided intervention mechanisms. (i) The positive impact is that this preference helps both pure demand-sided and specific two-sided intervention mechanisms not only to maximize social welfare, but also to achieve diverse targets: pure demand-sided one reduces government interventions while specific two-sided ones achieves budget neutrality. (ii) The negative impact is that, although maximizing social welfare, reference dependence makes general two-sided intervention mechanisms complex. This complexity is reflected in differences in intervention’s extent (i.e., a change in payment extent used to address inefficient vaccine markets) and structure (i.e., an adjustment from subsidy alone to subsidy/tax/zero schemes). These finds guide governments with diverse targets to design the corresponding intervention mechanisms to maintain sustainable health.https://www.mdpi.com/2071-1050/12/16/6371behavioral operationsreference dependenceintervention mechanismsvaccine marketgame theorysubsidy and tax |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Feiyu Guo Erbao Cao |
spellingShingle |
Feiyu Guo Erbao Cao Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets? Sustainability behavioral operations reference dependence intervention mechanisms vaccine market game theory subsidy and tax |
author_facet |
Feiyu Guo Erbao Cao |
author_sort |
Feiyu Guo |
title |
Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets? |
title_short |
Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets? |
title_full |
Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets? |
title_fullStr |
Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets? |
title_full_unstemmed |
Does Reference Dependence Impact Intervention Mechanisms in Vaccine Markets? |
title_sort |
does reference dependence impact intervention mechanisms in vaccine markets? |
publisher |
MDPI AG |
series |
Sustainability |
issn |
2071-1050 |
publishDate |
2020-08-01 |
description |
Prior research suggests that, to maintain sustainable health, inefficient vaccine markets need to be intervened by government subsidy. However, the effectiveness of these intervention mechanisms is often reduced by the absence of reference dependence preference. Our paper introduces this preference as the psychological disutility of overproduction and underproduction, and then uses game-theoretic way to find that reference dependence has implications on one-sided (pure demand or supply side) and two-sided intervention mechanisms. (i) The positive impact is that this preference helps both pure demand-sided and specific two-sided intervention mechanisms not only to maximize social welfare, but also to achieve diverse targets: pure demand-sided one reduces government interventions while specific two-sided ones achieves budget neutrality. (ii) The negative impact is that, although maximizing social welfare, reference dependence makes general two-sided intervention mechanisms complex. This complexity is reflected in differences in intervention’s extent (i.e., a change in payment extent used to address inefficient vaccine markets) and structure (i.e., an adjustment from subsidy alone to subsidy/tax/zero schemes). These finds guide governments with diverse targets to design the corresponding intervention mechanisms to maintain sustainable health. |
topic |
behavioral operations reference dependence intervention mechanisms vaccine market game theory subsidy and tax |
url |
https://www.mdpi.com/2071-1050/12/16/6371 |
work_keys_str_mv |
AT feiyuguo doesreferencedependenceimpactinterventionmechanismsinvaccinemarkets AT erbaocao doesreferencedependenceimpactinterventionmechanismsinvaccinemarkets |
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1724461051696644096 |