Christopher M. Snyder , Kendall Hoyt , Dimitrios Gouglas
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引用次数: 0
Abstract
We derive the optimal funding mechanism to incentivize development and production of vaccines against diseases with epidemic potential. In the model, suppliers’ costs are private information and investments are noncontractible, precluding cost-reimbursement contracts, requiring fixed-price contracts conditioned on delivery of a successful product. The high failure risk for individual vaccines calls for incentivizing multiple entrants, accomplished by the optimal mechanism, a -price reverse Vickrey auction with reserve, where is the number of selected entrants. Our analysis determines the optimal number of entrants and required funding level. Based on a distribution of supplier costs estimated from survey data, we simulate the optimal mechanism’s performance in scenarios ranging from a small outbreak, causing harm in the millions of dollars, to the Covid-19 pandemic, causing harm in the trillions. We assess which mechanism features contribute most to its optimality.
期刊介绍:
This journal seeks articles related to the economics of health and medical care. Its scope will include the following topics:
Production and supply of health services;
Demand and utilization of health services;
Financing of health services;
Determinants of health, including investments in health and risky health behaviors;
Economic consequences of ill-health;
Behavioral models of demanders, suppliers and other health care agencies;
Evaluation of policy interventions that yield economic insights;
Efficiency and distributional aspects of health policy;
and such other topics as the Editors may deem appropriate.