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

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  • Xie, Lei
  • Hou, Pengwen
  • Han, Hongshuai

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.

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  • Xie, Lei & Hou, Pengwen & Han, Hongshuai, 2021. "Implications of government subsidy on the vaccine product R&D when the buyer is risk averse," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:transe:v:146:y:2021:i:c:s1366554520308620
    DOI: 10.1016/j.tre.2020.102220
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    4. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2021. "A contribution to the theory of R&D investments," GLO Discussion Paper Series 940, Global Labor Organization (GLO).
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    7. Jahani, Hamed & Chaleshtori, Amir Eshaghi & Khaksar, Seyed Mohammad Sadegh & Aghaie, Abdollah & Sheu, Jiuh-Biing, 2022. "COVID-19 vaccine distribution planning using a congested queuing system—A real case from Australia," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).
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