FIGURE 13.3 The Market for Flu Shots with Spillover Benefits (A Positive Externality) The market demand curve
does not reflect the positive externality of flu vaccinations, so only QMarket will be exchanged. This outcome is
inefficient because the marginal social benefit exceeds the marginal social cost. If the government provides a

subsidy to consumers of flu shots, equal to the marginal social benefit minus the marginal private benefit, the level
of vaccinations can increase to the socially optimal quantity of QSocial.

Societal Change as an Innovation Outcome

Economist Carlota Perez draws on the lessons of past innovations to understand the current state of our

economy. She demonstrates that prior technological turning points, such as the proliferation of railroads and

the emergence of mass production, created initial periods of employment and wealth shifting but eventually
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