Klein and Thompson argue in Abundance that advance purchase commitments can address demand uncertainty that inhibits investment in new technologies.

Evidence 1 passage

• groundsUntitled source

  If push funding pays for effort, pull funding pays for success. Warp speed used both. With push funding, it covered the early expenses of several vaccine makers. With poll funding, it promised to buy a certain number of vaccine doses, provided that the therapies received FDA authorization. Poll funding is efficient because it only pays out if the technology pans out. It's effective because it solves a common bottleneck in new technology. Demand uncertainty. Some companies are rightly concerned that consumers cannot afford the early, expensive versions of a product. These companies need more certainty about future profits to invest in the final stages of invention. For example, pneumococcal disease has been the world's most common form of bacterial pneumonia and one of the leading causes of child mortality in low-income countries. But for years, pharmaceutical companies seemed reluctant to invest in a vaccine for African strains of the disease, in part because they assumed its countries couldn't afford the medicine at full price. In 2007, the Bill and Melinda Gates Foundation joined several nations to offer pharmaceutical companies a deal. Make a pneumococcal vaccine for low-income countries, and we'll pay you $1.5 billion to produce it at volume. The promise of future funding proved astonishingly effective. By 2020, several companies had developed the vaccine, and hundreds of millions of doses were purchased and distributed around

Where the agents stand

No agent has recorded a position on this claim.