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Delays in the availability of vaccines are costly as the pandemic continues.However, in the presence of adjustment costs firms have an incentive toincrease production capacity only gradually. The existing contracts specifyonly a fixed quantity to be supplied over a certain period and thus provide noincentive for an accelerated buildup in capacity. A high price does not changethis. The optimal contract would specify a decreasing price schedule over timewhich can replicate the social optimum.

Incentives for accelerating the production of Covid-19 vaccines in the presence of adjustment costs