The task of developing an effective COVID-19 vaccine has been a monumental challenge for the governments, pharmaceutical industry, research communities and entrepreneurs around the world. As of now, several vaccine variants have been successfully developed and deployed around the world. In this assignment you will explore how economic incentives shape the process of research and development. It will touch upon such topics as economic nature of ideas (e.g. are they rival and/or excludable?), provision of public goods, government's role in the market economy and economic efficiency of competitive and monopoly markets.

Q.

Let's look at a COVID-19 vaccine from the economics point of view. There are two ways to think about what the term "vaccine" represents. They are:

(a) A vaccine formula or a method of producing a given vaccine. At this level, a vaccine is just an idea, a recipe that anyone with a proper equipment can use to produce a vaccine product.

(b) An actual vaccine dose in a physical form (e.g. in a vial) that was manufactured by a company.

Discuss the rivalry and excludability of these two versions of a good, (a) and (b), and classify them into one of the 4 categories of goods being: private, public, quasi-public and common resources. Do you think a competitive market will produce an efficient quantity of good (a)? What about good (b)? Carefully explain your reasoning. If one of the goods cannot be produced by a competitive market, what are the possible solutions to this problem?