You are a government official given the task of spending $1 billion to encourage the devel- opment of a drug to slow the progress of Alzheimer's disease. Furthermore, the money has to also help make the drug affordable to the thousands of poor senior citizens who are Medicare recipients but also currently suffer from Alzheimer's disease. You have three choices available to you: 1. Distribute the $1 billion in grants among all firms that engage in Research and Development of an anti-Alzheimer's drug. No patents will be awarded. 2. Award cash prizes (a $500 million prize to the first firm that come up with a successful drug, $300 million to the second firm, $200 million to the third firm) that comes up with a new drug. Once again, no patent will be awarded. 3. Award a patent to each firm that develops a successful, unique drug, and use the $1 billion to help Medicare patients buy the drug. Briefly discuss the pros and cons of each approach and discuss which one you would choose.

You are a government official given the task of spending $1 billion to encourage the devel- opment of a drug to slow the progress of Alzheimer's disease. Furthermore, the money has to also help make the drug affordable to the thousands of poor senior citizens who are Medicare recipients but also currently suffer from Alzheimer's disease. You have three choices available to you: 1. Distribute the $1 billion in grants among all firms that engage in Research and Development of an anti-Alzheimer's drug. No patents will be awarded. 2. Award cash prizes (a $500 million prize to the first firm that come up with a successful drug, $300 million to the second firm, $200 million to the third firm) that comes up with a new drug. Once again, no patent will be awarded. 3. Award a patent to each firm that develops a successful, unique drug, and use the $1 billion to help Medicare patients buy the drug. Briefly discuss the pros and cons of each approach and discuss which one you would choose.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 4PA

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