Vaccines can be an effective means to cope with infectious diseases from a social point of view, but investment by private firms in the development of new vaccines could be suboptimal. First, this study briefly discusses a typical vaccine development process and the characteristics of a vaccine product to explain the causes of this market failure.

Next, this study analyzes the optimal use of ‘push incentives’ and ‘pull incentives’ to enhance R&D incentives for a vaccine development firm. More specifically, here, push incentives can lower R&D costs and alleviate the firm’s financing constraint (regardless of R&D result); pull incentives can raise the level of reward from a successful R&D result. This study shows that (i) it is optimal to use only push incentives if the firm faces severe financing constraints, and the social planner’s budget is relatively small; (ii) It is optimal to use both push and pull incentives if the firm faces severe financing constraints, and the social planner’s budget is relatively large; (iii) It is optimal to use only pull incentives if the firm does not face any financing constraints; (iv) In cases where the rewards that the firm can obtain from a successful R&D result are quite limited (i.e., the market size is small), providing push incentives alone is not sufficient to enhance the company's R&D incentives.

Lastly, after examining vaccine R&D support policy in Korea and a few other foreign countries, this study provides relevant policy implications, including the circumstances under which providing pull incentives play an important role, the need for a vaccine innovation policy for harmonious use of push and pull incentives, and institutional improvements required to use pull incentives more effectively.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 Vaccine Development Process and Characteristics of the Vaccine Market

Chapter 3 Analysis of Effective Vaccine R&D Support Measures
　Section 1 Analytical Model
　Section 2 Endemic Scenario Analysis
　Section 3 Pandemic Scenario Analysis for a New Infectious Disease
　Section 4 Additional Discussions and Considerations Related to the Analysis
　Section 5 Conclusion

Chapter 4 Current Status of R&D Support in the Vaccine Sector and Policy Implications
　Section 1 R&D Support for Infectious Diseases in Major Foreign Countries
　Section 2 R&D Support for Infectious Diseases in Korea
　Section 3 R&D Support for COVID-19 Vaccines
　Section 4 Policy Implications

Chapter 5 Conclusion
　Section 1 Key Findings
　Section 2 Limitations of This Study

References
Appendix
ABSTRACT