Designing advance market commitments for new vaccines
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Working paper (Stanford Institute for Economic Policy Research)
- Author(s):
- Kremer, Michael, author Levin, Jonathan, author Snyder, Christopher M., author
- Contributor(s):
- Stanford Institute for Economic Policy Research, issuing body.
- Publication:
- Stanford, CA : Stanford Institute for Economic Policy Research (SIEPR), November 2020
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Developing Countries -- economics Health Care Sector Investments Models, Economic Vaccines -- economics United States
- Genre(s):
- Technical Report
- Abstract:
- Advance market commitments (AMCs) provide a mechanism to stimulate investment by suppliers of products to low-income countries. In an AMC, donors commit to a fund from which a specified subsidy is paid per unit purchased by low-income countries until the fund is exhausted, strengthening suppliers' incentives to invest in research, development, and capacity. Last decade saw the launch of a $1.5 billion pilot AMC to distribute pneumococcal vaccine to the developing world; in the current pandemic, variations on AMCs are being used to fund Covid-19 vaccines. This paper undertakes the first formal analysis of AMCs. We construct a model in which an altruistic donor negotiates on behalf of a low-income country with a vaccine supplier after the supplier has sunk investments. We use this model to explain the logic of an AMC--as a solution to a hold-up problem--and to analyze alternative design features under various economic conditions (cost uncertainty, supplier competition). A key finding is that optimal AMC design differs markedly depending on where the product is in its development cycle.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-ND license. (More information)
- Extent:
- 1 online resource (1 PDF file (61 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 101776195 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101776195