The first phase is research and development (R&D) to find a workable approach. There are several completing platforms for vaccine development including using inactivate viral parts as well as more modern techniques utilizing DNA and RNA vaccines that simulate immune response without viral particles. Once a platform and its specific vaccine are proven effective, production begins. The R&D facilities, however, are not commercial production facilities, they are laboratories with limited production capacity. The second phase moves production from the laboratory to commercial scale production facilities. The production of any vaccine is a two-stage process. First the active ingredient (e.g., the dead virus) is produced and that is used as an input to create the dosage form of the vaccine (normally a liquid containing the active ingredient).

i. Suppose the government wishes to expand production of the dosage form of the vaccine in the first phase by producing the active ingredient, say in government labs, and turning that input over to the R&D facilities to produce more of the dosage. Using production economics of the short-run, what limitations does the government face in ramping up production of the vaccine?

ii. How do these limitations change when moving into the second phase of production?