What is a potential positive externality of pharmaceutical companies?

The choice highlighting the production of vaccines benefiting public health represents a potential positive externality of pharmaceutical companies effectively. Externalities refer to the consequences of an industrial or commercial activity that affect other parties without being reflected in the costs of the goods or services involved.

In this context, when pharmaceutical companies develop vaccines, they contribute to the overall health of the population by preventing diseases, which leads to lower healthcare costs, higher productivity, and improved quality of life. This benefit extends beyond the companies themselves, influencing community health outcomes, ultimately reducing the burden on healthcare systems and promoting a healthier workforce.

In contrast, increased product prices, the development of new patents, and reduction in production costs reflect internal factors directly tied to the company's business operations, and do not embody the external benefits provided to society at large. While they may have economic implications, they do not align with the concept of positive externalities in the same way that the public health benefits derived from vaccination do.