Implications of government subsidy on the vaccine product R&D when the buyer is risk averse

Lei Xie, Pengwen Hou and Hongshuai Han

Transportation Research Part E: Logistics and Transportation Review, 2021, vol. 146, issue C

Abstract: This paper analyses the choice of subsidy offered to a vaccine supply chain with a risk-averse buyer. We find that for a higher innovation effort and level of social benefits, the per-unit production subsidy is better when there is a low innovation cost coefficient, a low level of risk aversion, or a high potential demand. Otherwise, under the opposite conditions, the R&D innovation effort subsidy should be selected. Furthermore, from an evolutionary game theoretical perspective, we also present the stability performance for the subsidies, and the results show that when the manufacturer’s innovation cost coefficient is relatively low, the more profitable per-unit production subsidy may be abandoned due to its performance instability.

Keywords: Supply chain management; Government subsidy; Accumulated social benefit; Vaccines; Evolutionarily stable strategy (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (11)

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DOI: 10.1016/j.tre.2020.102220

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