The Impact Of Government Subsidy Policies On Vaccine Innovation And Production

Vaccines are a vital resource for maintaining people’s health and quality of life.The creation of vaccinations requires a creative process with a high level of technology and a lengthy cycle time.For businesses to improve production processes and provide high-quality vaccines that adhere to regulations,are simple to store,and are immunologically successful,research and development expenditures must be substantial.By various forms of tax subsidies or R&D innovation subsidies,the government frequently plays a significant role in supporting the R&D production of vaccine firms by encouraging and facilitating the manufacture of highquality vaccines for people’s health.However,each sort of government subsidy policy has unique features and results that will affect businesses in different ways.A critical topic for the government to think about is which subsidy program and how much of a subsidy to adopt for certain vaccines.The supply chain for vaccine manufacture is challenged by the recent flu outbreak.Critical questions need to be addressed on how the government should implement a subsidy program,how vaccine makers should choose an appropriate R&D and manufacturing strategy in light of their unique circumstances,and how retailers should choose the proper order quantity.Based on the above background,this research builds the Stackelberg game model under the government subsidy policy in accordance with the problem characteristics.In addition,the models for government-funded free vaccination model for the public and the non-free vaccination model for the public.The social benefit function and the manufacturer’s profit function are constructed under the government-funded free vaccination model for the population.The people’s non-free vaccination model is further divided into the people’s completely self-funded vaccination model and the people’s government-funded vaccination model,in which the social benefit function,the manufacturer’s profit function,the retailer’s profit function,and the supply chain profit function are constructed from the perspective of decentralized and centralized decision making,respectively.The game theory is applied in each model to maximize social benefits as the ultimate goal,and the inverse induction method is used.Finally,the equilibrium strategy and optimization scheme of government subsidy policy,manufacturer R&D and production,and retailer procurement are obtained.We also examine the changes in R&D,production,and income in each models,both with and without various types of government subsidies,as well as the main variables influencing supply chain participants’ choices.Lastly,the government subsidy scheme is given decision support.The study demonstrates:(1)When the government gives consumer subsidies to consumer,the enactment of consumer subsidies by the government will increase social benefits,profits for retailers and manufacturers,levels of R&D innovation for manufacturers,and orders for retailers,regardless of whether the government provides a subsidy policy for manufacturers and what kind of subsidy policy it provides for manufacturers.(2)When the government gives subsidies to manufacturers,both manufacturers and retailers can benefit from R&D innovation subsidies,tax subsidies,and mix subsidies.By offering subsidies,the government may also raise the social benefits it receives,and each of the three subsidy policies can boost business demand and R&D innovation.Depending on the situation,these subsidies will have varied consequences:(1)For manufacturers with a larger production scale,the subsidy should be chosen based on the characteristics of R&D innovation: if the innovation cost is high,the subsidy for R&D innovation is less effective at encouraging manufacturers to produce and should instead be provided directly through tax subsidies;however,if the innovation cost is low,the subsidy for R&D innovation can benefit from the lower innovation cost to encourage manufacturers to produce even more.(2)For vaccines with varying potential demand,the government should offer manufacturers blended subsidies for vaccines with high potential demand because these subsidies can better increase manufacturers’ production volumes to meet the enormous demand;for vaccines with lower potential demand,manufacturers should be offered R&D innovation subsidies in order to boost order demand and innovation level.(3)Government subsidies for manufacturers are more widely used when it comes to R&D and innovation.The government should decide to provide blended subsidies to vaccine manufacturers in situations where R&D innovation subsidies,tax subsidies,and blended subsidies are all appropriate.The R&D innovation subsidy should be selected when no tax subsidies nor blended subsidies apply.