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In this video well apply our knowledge of subsidies to overcome market failure. Specifically well see how subsidies can be applied to overcome the market failure associated with positive consumption externalities and positive production externalities. First well look at positive consumption externalities, specifically those associated with vaccines. Vaccines are used to improve immunity against particular diseases. If I vaccinate my son against diseases such as measles, mumps and rubella then he wont suffer from them. If he doesnt suffer from these diseases, then he cannot spread it to anyone else. Getting him the vaccine has greater social benefits, however I am not concerned about those when I take him to the doctor. My primary concern is his health and preventing disease for him. I am willing to pay for the benefits my son receives but not the rest of society. If this is the prevalent mindset for most individuals, vaccines are likely to be underconsumed. Therefore the govern