Beneficial Externalities:

The example of  industry supplying smallpox vaccinations is assumed to be selling  in  a  competitive market  may  be  cited to appreciate the efforts  of positive  or  benefited externality. See that the marginal  private benefit  of getting the vaccination is less than the marginal social or public benefit by the amount of  the  external benefit,  i.e.,  the fact that if  one  person  gets  the vaccination, others are less likely to get the smallpox even if they themselves are  not  vaccinated. Figure below  shows the effects  of  a  positive  or beneficial externality. The marginal external benefit of getting a smallpox shot is  represented  by  the  vertical distance  between  the  two demand  curves. Assume that  there are no external costs, so that social cost equals  individual cost.  

If consumers only take  into  account their own private benefits from getting vaccinations, the market will  end  up  at price Pp and  quantity as  before, instead  of the more efficient price  P,  and  quantity  a.  These  latter price quantity combination reflects the idea that  the marginal  social benefit should equal the marginal  social cost, i.e., production should be  increased as long as the marginal social benefit exceeds the marginal social cost. The result  in  an unfettered market  is  ineflcient  since at  the quantity Qp, the  social benefit is greater than the societal cost.  So the society as a whole would be better off if more goods had been produced. The problem is that people are buying too  few vaccinations.

The issue of external benefits is related to of public goods, i.e., goods where it is difficult, if not impossible,  to exclude people from benefits.