Effect of free-riding behavior on vaccination coverage with customer regret

Prevention of influenza has been a social concern for a long time. But the coverage of vaccination, which is the most effective way to prevent people from infection, is usually undesirably low. It is envisaged that the free-riding
behavior of people (customers) may be a main cause of the low vaccination coverage and affected by customer regret. To the best of our knowledge, no research has addressed this issue. In this paper, we formulate a vaccine demand model incorporating the free rider behavior and customer regret. Solving the model, we show that, as the coefficient of customer regret increases, more people would like to be free riders, which affects the vaccine market coordination. When the coefficient of customer regret is large enough, there will be no risk-taking customers under the socially optimal vaccination coverage. Extending the model to include incomplete demand information and oligopolistic supply, we find that both inaccurate estimation of customer regret and incomplete supply competition will lead to imbalance of supply and demand. Finally, considering government’s subsidy allocations on both supply and demand sides, we present a subsidy allocation mechanism to help the market achieve the largest equilibrium coverage.