Government support for the development of Covid-19 vaccines took two different forms.Some firms accepted grants (a.k.a, direct monetary support) for vaccine development and testing.As a condition of the grant, the government has options to purchase a first and specific number of vaccine doses.Other firms chose not to accept grants.Instead they negotiated advanced-purchase agreementto support pre-approval manufacturing of vaccines.The purchase agreement stipulates that payment will be made upon delivery of the pre-specified number of doses.

• 1.Is the successful development and delivery of a vaccine for Covid-19 virus risky or an uncertainty?
• 2.In the case of direct support agreements, who bears the cost of failure?
• 3.In the case of advanced purchase agreements, who bears the cost of a failure?
• 4.Pfizer was the first firm to have its vaccine authorized for use in the U.S.It did not accept a grant to support development and testing, but the Pfizer did negotiate an advance-purchase agreement for $1.95 billion to support the manufacturing of 100 million doses.Looking back, what hiddeninformation is revealed by Pfizer's deal?