Michael Kremer: evaluation

Transcript context

…If you think the market risk premium is off for very large investments for biomedical research, do you think the same is true for smaller investments? That is, what are the micro-foundations of what goes wrong with the market risk premium and biomedical investment? Does it plague all venture capital firms for biomedical ideas, or just the big stuff because it’s a liquidity issue? So for vaccines, we need advance market commitment, but for ordinary investments, venture capital will work just fine? What’s your view? There may be issues around risk. That’s not necessarily where I would go first in terms of the market failures associated with vaccines. The first market failure associated with vaccines is just a straight communicable disease. If we thought about individuals buying vaccines on their own — when I take a vaccine that would benefit you if you were closer or nearby, but indirectly, it even benefits you. Because I don’t infect somebody, they don’t infect somebody, and eventually, they don’t infect you. If you could subsidize only the buyers, you could have vaccine vouchers. Let the production side take care of itself and capture the externality that way. But presumably, there’s something wrong with the generation mechanism.…

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