 Option-based guarantees to accelerate urgent, high risk vaccines: a new market-shaping approachDavid Manheim and Derek Foster No swd4a, OSF Preprints from Center for Open Science Abstract: Over the coming year, preventing further waves of COVID-19 and reducing its impact on society will likely require vaccines, so accelerating their availability is critical. However, preparations for large-scale manufacturing, such as building production facilities, are typically delayed until a vaccine is proven safe and effective. This makes sense from a commercial perspective, but the additional time before the vaccine becomes available incurs great costs in terms of lives lost and damage to the economy. There are several potential solutions to reducing the delay between the vaccine being proven effective and its being mass-produced, all of which involve incentives or subsidies to invest in production facilities. We review these, and propose a novel approach using “option-based guarantees,” in which the government commits to paying a proportion of the manufacturer’s preparation costs should the product turn out not to be viable. This counterintuitive approach of payment for failure is appropriate because in the case of success, a company makes money from the product itself, and does not need additional money from the government. This reduces the risk to the company while maintaining an incentive to produce a high-quality product quickly and at scale. Date: 2020-05-24 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:swd4a Access Statistics for this paper More papers in OSF Preprints from Center for Open Science |
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