The problem with externalities is that, as the name of externalities suggests, external costs and benefits are excluded from the said economic transaction or activity (for example, selling masks, buying masks) and individuals’ benefit and cost calculations. While individuals include their personal (private) benefits and costs in their shopping, economic and social activities, they do not include social (overflowing), that is, their external benefits and costs when there is no coercion mechanism. Economic activities that are subject to externality take place above the socially optimum amount in case of negative externality (overproduction/consumption) and under positive externality (underproduction/consumption).
In this case, to put externalities into the benefit-cost calculations of individuals, there is a need for incentive policies in case of external benefit, and deterrence in case of external cost. In the mask example, individuals either think that others will wear masks and that they will be protected or take into account only the special benefits of the mask they will wear. In this case, mask use and mask quality remain below the socially optimum level. This is one of the reasons why the use of masks is not at the socially optimum level, in addition to the fact that some individuals do not wear masks because of their low-risk perception (risk-loving).
At this point, subsidizing the use of masks, ie free presentation of masks, is the most rational policy option. Because the cost (indirect) savings resulting from the case to be prevented by a mask (in a certain possibility) is much higher than the cost of a mask. Due to the free mask offering, the benefit of shortening the outbreak one day and returning economic activities to normal one day earlier (marginal) is equal to the cost of mask distribution (marginal) that will shorten the outbreak one day, etc. it is necessary to continue to bring its use to the socially optimum level through policy.
An important point to be considered in policymaking in the context of masks and other protective measures is the need to support special initiatives and solutions in addition to “politics”. Regarding the mask, market failure due to the above-mentioned externalities and public intervention (subsidy) to be done are not absolute. In the majority of society, individuals will take highly effective epidemic prevention and protection measures without the need for public intervention.
Several measures are effectively taken by individuals, such as investment in the mask industry, selling masks, wearing a mask, making use of complementary medicine, home production solutions, developing hygiene habits, stopping handshaking, and paying attention to nutrition. Therefore, it is more rational to encourage some special measures to increase or prohibit costs. In this context, public intervention should be designed to complement private solutions.