Covid raises many problems for society and offers quite a few examples of market failure. These include:
- Externalities. A young person catching Covid may face few personal costs, but there is an external cost because they may transmit to more vulnerable people.
- Information asymmetries. There is a lot of misinformation about Covid and vaccines. This makes it more difficult for individuals and business to make rational decisions.
- Monopoly power. Vaccines patented by large multinationals. Supply is dominated by a few of the richer countries.
- Public good – Improving public health is a public good (non-rivalry/ non-excludable benefits). But, there is an incentive to be a free-rider on other people who make efforts to improve health.
- Inequality. Lockdowns and social restrictions have affected different groups in different ways. Some jobs (typing at home) have done well and workers have increased personal savings. Other sectors of the economy have suffered from economic restrictions and may never recover.
