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Pricing the COVID-19 Vaccine: A Mathematical Approach

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  • Susan Martonosi
  • Banafsheh Behzad
  • Kayla Cummings

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

  • Susan Martonosi & Banafsheh Behzad & Kayla Cummings, 2020. "Pricing the COVID-19 Vaccine: A Mathematical Approach," Papers 2101.03234, arXiv.org.
    • Handle: RePEc:arx:papers:2101.03234
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    File URL: http://arxiv.org/pdf/2101.03234
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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Health > Allocation and rationing

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