Lecture+13 - Human Capital: Education and Health Click to...

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Click to edit Master subtitle style 5/10/10 Human Capital: Education and Health Third Lecture
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5/10/10 Neglected Diseases and the Development of Vaccines The best prospect for dramatic reductions in the disease burden is the development of new vaccines E.g., smallpox vaccination campaign led to the eradication of the disease by 1980 But research into diseases that affect developing countries has been slow
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5/10/10 Why Are These Diseases Neglected? Developing countries are poor, so recipients have low willingness-to- pay Intellectual property protection is poor, so rewards for developing a vaccine are weak Vaccines have high fixed costs, low marginal costs & once research is done, governments can bargain for low prices
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5/10/10 Incentivizing Research Two main approaches: push and pull Push approaches reward the use of inputs to research E.g., research grants, tax credits for research on certain topics Political pressure and bureaucracy often mean that resources are used inefficiently
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5/10/10 Incentivizing Research Pull factors reward output This can work in several different ways: Prizes Patent buyouts Patent extensions Purchase commitments
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5/10/10 How a Purchase Commitment Would Work The first concern is specifying what should count as a research “success”
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Lecture+13 - Human Capital: Education and Health Click to...

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