Publication Date

2022

Abstract

As society grows to understand the need to promote innovation, policymakers try to employ an arsenal of policy tools, from traditional intellectual property ("JP") to newer tools such as grants, regulatory vouchers, and prizes. This Article argues that these frameworks crowd out certain types of investments in innovation projects that have a high social value. Vaccine innovation is a case in point. Despite the immense socioeconomic benefit of vaccines, existing policies have been limited in fostering investments in this space. This is because they fail to directly address the relevant bottleneck issues distinct to vaccine development.

This Article offers a policy measure especially apt at addressing this gap-tax law. Using properly designed tax instruments, policymakers can harness markets to produce innovation in a bottom-up manner. A key advantage of tax preferences for developing innovation is that they offer a superior mechanism of allocating risks and rewards while economizing on resources, administrative costs, regulatory capture, and informational problems.

The framework developed here offers a way forward in vaccine development, but also serves as a blueprint for interventions in other traditionally underfunded socially beneficial innovations. Critically, tax policies work synergistically with other policy measures, making them an important lever in the regulatory toolset-a vital measure for preparedness in the post-pandemic world.

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