The University of Chicago Launches Market Shaping Accelerator to Address Global Challenges

CHICAGO, May 10, 2023 /PRNewswire/ -- The University of Chicago has announced the launch of the Market Shaping Accelerator (MSA), an initiative aimed at accelerating efforts to address major global challenges – such as climate change, biosecurity, and pandemic preparedness – by leveraging the power of incentives, competition, and private sector innovation.

Supported by Schmidt Futures, a philanthropic initiative of Eric and Wendy Schmidt, Citadel founder and CEO Ken Griffin, and the Digital Harbor Foundation, the MSA brings together renowned experts in market shaping, including Nobel laureate economist Michael Kremer and Rachel Glennerster from the University of Chicago and Christopher Snyder from Dartmouth College. This group of experts has contributed significantly to research and policy successes of market shaping mechanisms, including developing advance market commitments (AMCs) for carbon removal (Frontier) and pneumococcal vaccines, which saved an estimated 700,000 lives in low-income countries.

"Climate change and pandemics could both threaten to devastate our economies and societies," said Michael Kremer, University Professor in Economics, University of Chicago and 2019 Nobel Laureate. "To address these risks, we need technological and social innovations, but under our current institutions, market incentives to invest in innovations to address these risks are inadequate given the huge social need. However, market-shaping mechanisms can harness the power and creativity of the private sector to develop the innovations we need to address climate change and pandemics."

Market shaping uses economic tools to solve market failures where commercial incentives for innovation trail behind societal needs. One example is advance market commitments (AMCs), which are "pull mechanisms" that tie payments to outputs. AMCs establish legally binding contracts to subsidize the purchase of a large quantity of a specific innovation if it is invented. Other examples include prizes, which are competitions that reward solutions for a specific problem, and milestone contracts, which are payments linked to achieving interim steps toward an innovation.

The MSA will collaborate closely with governments, multilateral institutions, and philanthropists to design the details of contracts and policies to accelerate and scale innovation. Already, the MSA is collaborating with global organizations and policymakers to advance innovation in carbon removal, climate-resilient crops, and universal coronavirus vaccines.

"We don't know when the next pandemic will hit but we know it's coming and we know, on average we will lose $800 billion every single year (in expectation) to pandemics," said Rachel Glennerster, Associate Professor of Economics, University of Chicago and former Chief Economist at the Foreign Commonwealth & Development Office (FCDO). "There are lots of great ideas about how to protect against the next pandemic, including vaccines that could protect against any future coronavirus or any future flu. But how do we make sure these are produced at sufficient scale that everyone can benefit from them when the next pandemic hits? This is the challenge the MSA is taking on."

The MSA benefits from a diverse group of expert advisors, including Susan Athey of Stanford University, Catherine Bremner of Impax Asset Management, Michael Greenstone and Steven Levitt of the University of Chicago, Matthew Kotchen of Yale University, Nan Ransohoff of Frontier, Tom Kalil of Schmidt Futures, Jean Tirole of the Toulouse School of Economics and 2013 Nobel Prize recipient, Heidi Williams of Dartmouth College, and Catherine Wolfram of UC Berkeley.

"We are fortunate to have advisors who are among the world's leading experts in market design and innovation, as well as some of the best thinkers and practitioners in the diverse domains the MSA will cover," said Christopher Snyder, the Joel Z and Susan Hyatt Professor in Economics at Dartmouth College.

The MSA was officially launched last week at an event held at the International Monetary Fund in Washington, DC. The agenda and video from the event can be found here.

SOURCE University of Chicago