IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v103y2021ics0305048321000608.html
   My bibliography  Save this article

Pricing the COVID-19 vaccine: A mathematical approach

Author

Listed:
  • Martonosi, Susan E.
  • Behzad, Banafsheh
  • Cummings, Kayla

Abstract

According to the World Health Organization, development of the COVID-19 vaccine is occurring in record time. Administration of the vaccine has started the same year as the declaration of the COVID-19 pandemic. The United Nations emphasized the importance of providing COVID-19 vaccines as a global public good, which is accessible and affordable world-wide. Pricing the COVID-19 vaccines is a controversial topic. We use optimization and game theoretic approaches to model the COVID-19 U.S. vaccine market as a duopoly with two manufacturers Pfizer-BioNTech and Moderna. The results suggest that even in the context of very high production and distribution costs, the government can negotiate prices with the manufacturers to keep public sector prices as low as possible while meeting demand and ensuring each manufacturer earns a target profit. Furthermore, these prices are consistent with those currently predicted in the media.

Suggested Citation

  • Martonosi, Susan E. & Behzad, Banafsheh & Cummings, Kayla, 2021. "Pricing the COVID-19 vaccine: A mathematical approach," Omega, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:jomega:v:103:y:2021:i:c:s0305048321000608
    DOI: 10.1016/j.omega.2021.102451
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305048321000608
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.omega.2021.102451?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    2. Sanjay Mehrotra & Hamed Rahimian & Masoud Barah & Fengqiao Luo & Karolina Schantz, 2020. "A model of supply‐chain decisions for resource sharing with an application to ventilator allocation to combat COVID‐19," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(5), pages 303-320, August.
    3. Elizabeth F. R. Gingerich, 2020. "Values-Based Leadership: Exploring Exemplary Approaches," Management for Professionals, in: Satinder Dhiman & Joan Marques (ed.), New Horizons in Positive Leadership and Change, chapter 9, pages 159-173, Springer.
    4. Ahearn, Bertie & Singh Ahluwalia, Montek & Ahmed, Masood & Alphandéry, Edmond & Altwaijri, HE Dr Abdulaziz Altwaijri & Amato, Giuliano & Amersi, Mohamed & Arbour, Louise & Aria, Óscar & Aziz, Shaukat , 2020. "The COVID-19 pandemic: a letter to G20 leaders," LSE Research Online Documents on Economics 104370, London School of Economics and Political Science, LSE Library.
    5. Ivanov, Dmitry, 2020. "Predicting the impacts of epidemic outbreaks on global supply chains: A simulation-based analysis on the coronavirus outbreak (COVID-19/SARS-CoV-2) case," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Batabyal, Amitrajeet & Beladi, Hamid, 2022. "City and Regional Demand for Vaccines Whose Supply Arises from Competition in a Bertrand Duopoly," MPRA Paper 113758, University Library of Munich, Germany, revised 28 Jun 2022.
    2. Emanuele Blasioli & Bahareh Mansouri & Srinivas Subramanya Tamvada & Elkafi Hassini, 2023. "Vaccine Allocation and Distribution: A Review with a Focus on Quantitative Methodologies and Application to Equity, Hesitancy, and COVID-19 Pandemic," SN Operations Research Forum, Springer, vol. 4(2), pages 1-32, June.
    3. Wang, Fan & Xu, Danni & Zhuo, Xiaopo & Zhang, Chao & Liu, Yaoqi, 2022. "Improving consumer welfare in vaccine market: Pricing, government subsidies and consumer awareness," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    4. Choi, Tsan-Ming & Shi, Xiutian, 2022. "Reducing supply risks by supply guarantee deposit payments in the fashion industry in the “new normal after COVID-19”," Omega, Elsevier, vol. 109(C).
    5. Tang, Lianhua & Li, Yantong & Bai, Danyu & Liu, Tao & Coelho, Leandro C., 2022. "Bi-objective optimization for a multi-period COVID-19 vaccination planning problem," Omega, Elsevier, vol. 110(C).
    6. Kamran, Mehdi A. & Kia, Reza & Goodarzian, Fariba & Ghasemi, Peiman, 2023. "A new vaccine supply chain network under COVID-19 conditions considering system dynamic: Artificial intelligence algorithms," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).
    7. Ekinci, Esra & Mangla, Sachin Kumar & Kazancoglu, Yigit & Sarma, P.R.S. & Sezer, Muruvvet Deniz & Ozbiltekin-Pala, Melisa, 2022. "Resilience and complexity measurement for energy efficient global supply chains in disruptive events," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    8. Rey, David & Hammad, Ahmed W. & Saberi, Meead, 2023. "Vaccine allocation policy optimization and budget sharing mechanism using reinforcement learning," Omega, Elsevier, vol. 115(C).
    9. Shaker Ardakani, Elham & Gilani Larimi, Niloofar & Oveysi Nejad, Maryam & Madani Hosseini, Mahsa & Zargoush, Manaf, 2023. "A resilient, robust transformation of healthcare systems to cope with COVID-19 through alternative resources," Omega, Elsevier, vol. 114(C).
    10. Gilani, Hani & Sahebi, Hadi, 2022. "A data-driven robust optimization model by cutting hyperplanes on vaccine access uncertainty in COVID-19 vaccine supply chain," Omega, Elsevier, vol. 110(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhi, Bangdong & Wang, Xiaojun & Xu, Fangming, 2022. "Managing inventory financing in a volatile market: A novel data-driven copula model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    2. Sawik, Tadeusz, 2022. "Stochastic optimization of supply chain resilience under ripple effect: A COVID-19 pandemic related study," Omega, Elsevier, vol. 109(C).
    3. Kumar Mangla, Sachin & Chauhan, Ankur & Kundu, Tanmoy & Mardani, Abbas, 2023. "Emergency order allocation of e-medical supplies due to the disruptive events of the healthcare crisis," Journal of Business Research, Elsevier, vol. 155(PA).
    4. Chowdhury, Priyabrata & Paul, Sanjoy Kumar & Kaisar, Shahriar & Moktadir, Md. Abdul, 2021. "COVID-19 pandemic related supply chain studies: A systematic review," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).
    5. Ramani, Vinay & Ghosh, Debabrata & Sodhi, ManMohan S., 2022. "Understanding systemic disruption from the Covid-19-induced semiconductor shortage for the auto industry," Omega, Elsevier, vol. 113(C).
    6. Shaker Ardakani, Elham & Gilani Larimi, Niloofar & Oveysi Nejad, Maryam & Madani Hosseini, Mahsa & Zargoush, Manaf, 2023. "A resilient, robust transformation of healthcare systems to cope with COVID-19 through alternative resources," Omega, Elsevier, vol. 114(C).
    7. Choudhury, Nishat Alam & Ramkumar, M. & Schoenherr, Tobias & Singh, Shalabh, 2023. "The role of operations and supply chain management during epidemics and pandemics: Potential and future research opportunities," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    8. Farheen Naz & Anil Kumar & Abhijit Majumdar & Rohit Agrawal, 2022. "Is artificial intelligence an enabler of supply chain resiliency post COVID-19? An exploratory state-of-the-art review for future research," Operations Management Research, Springer, vol. 15(1), pages 378-398, June.
    9. Hosseini-Motlagh, Seyyed-Mahdi & Samani, Mohammad Reza Ghatreh & Homaei, Shamim, 2023. "Design of control strategies to help prevent the spread of COVID-19 pandemic," European Journal of Operational Research, Elsevier, vol. 304(1), pages 219-238.
    10. Fang, Da & Guo, Yan, 2022. "Flow of goods to the shock of COVID-19 and toll-free highway policy: Evidence from logistics data in China," Research in Transportation Economics, Elsevier, vol. 93(C).
    11. Fattahi, Mohammad & Keyvanshokooh, Esmaeil & Kannan, Devika & Govindan, Kannan, 2023. "Resource planning strategies for healthcare systems during a pandemic," European Journal of Operational Research, Elsevier, vol. 304(1), pages 192-206.
    12. Paul, Ananna & Shukla, Nagesh & Trianni, Andrea, 2023. "Modelling supply chain sustainability challenges in the food processing sector amid the COVID-19 outbreak," Socio-Economic Planning Sciences, Elsevier, vol. 87(PA).
    13. Papanagnou, Christos & Seiler, Andreas & Spanaki, Konstantina & Papadopoulos, Thanos & Bourlakis, Michael, 2022. "Data-driven digital transformation for emergency situations: The case of the UK retail sector," International Journal of Production Economics, Elsevier, vol. 250(C).
    14. Chumasande Lalendle & Leila Goedhals-Gerber & Joubert van Eeden, 2021. "A Monitoring and Evaluation Sustainability Framework for Road Freight Transporters in South Africa," Sustainability, MDPI, vol. 13(14), pages 1-22, July.
    15. Tang, Lianhua & Li, Yantong & Bai, Danyu & Liu, Tao & Coelho, Leandro C., 2022. "Bi-objective optimization for a multi-period COVID-19 vaccination planning problem," Omega, Elsevier, vol. 110(C).
    16. Li, Haojie & Zhang, Yingheng & Zhu, Manman & Ren, Gang, 2021. "Impacts of COVID-19 on the usage of public bicycle share in London," Transportation Research Part A: Policy and Practice, Elsevier, vol. 150(C), pages 140-155.
    17. Yu, Wantao & Zhao, Gen & Liu, Qi & Song, Yongtao, 2021. "Role of big data analytics capability in developing integrated hospital supply chains and operational flexibility: An organizational information processing theory perspective," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    18. Rozhkov, Maxim & Ivanov, Dmitry & Blackhurst, Jennifer & Nair, Anand, 2022. "Adapting supply chain operations in anticipation of and during the COVID-19 pandemic," Omega, Elsevier, vol. 110(C).
    19. Gillis, Melissa & Urban, Ryley & Saif, Ahmed & Kamal, Noreen & Murphy, Matthew, 2021. "A simulation–optimization framework for optimizing response strategies to epidemics," Operations Research Perspectives, Elsevier, vol. 8(C).
    20. Marić, Josip & Opazo-Basáez, Marco & Vlačić, Božidar & Dabić, Marina, 2023. "Innovation management of three-dimensional printing (3DP) technology: Disclosing insights from existing literature and determining future research streams," Technological Forecasting and Social Change, Elsevier, vol. 193(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:103:y:2021:i:c:s0305048321000608. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.