Christopher Snyder Receives Sloan Foundation Grant for Research on Incentivizing Innovation

When commercial incentives for innovation trail behind societal needs, solutions to global challenges stall—such as life-saving vaccines, climate-resilient crops, and advances in carbon removal. The Market Shaping Accelerator (or MSA), a multi-institutional research initiative, accelerates innovation by developing funding policies to align private-sector incentives with the public good.

"Traditional grant funding can be viewed as paying for attempts at innovation, whereas market-based incentives pay for success," says economics professor Christopher Snyder who as co-faculty director leads the MSA with longtime collaborator and 2019 Economics Nobel Prize winner Michael Kremer of the University of Chicago and Rachel Glennerster of the Center for Global Development.

In March, the Alfred P. Sloan Foundation awarded nearly $1 million in funding to Snyder to investigate how funding mechanisms can shape markets and promote innovation. The grant will enable the MSA to recruit additional researchers—both pre-doctoral and postdoctoral scholars—and facilitate long-term studies.

The principles behind "pull funding"

Founded in 2023, the MSA aims to foster innovation in areas where social needs are high but commercial incentives are limited, such as healthcare or climate issues.

"Typically, funders default to what's called 'push funding:' That's where you try to identify promising innovators and provide them with grant funding for the start of a project," Snyder says. "We're not arguing for abandoning push funding, but we're saying in some cases there might be a better alternative—'pull funding'—where market incentives are dangled at the other end of the pipeline, promising payment after the innovation has been created. The incentives encourage researchers to innovate quickly to produce the products and solutions society wants."

Pull funding can work even when it's unclear which labs or companies are best positioned to develop a viable product, having the requisite ideas, skill, and drive, Snyder says. A type of pull funding that might be especially effective in the face of such uncertainty is an "advance market commitment," a fund set up before a new product is invented, used to top up what consumers pay for it over some initial period. This idea was put forward by Kremer and Glennerster in their 2004 book, Strong Medicine.

"If the innovator produces something that's low cost and can be rolled out at scale, they earn a bigger reward," Snyder says.

In 2010, an advance market commitment was piloted in a $1.5 billion program for a next-generation vaccine against pneumococcus, a leading cause of childhood mortality from pneumonia and meningitis in low-income countries. The existing vaccine, developed for the high-income market, covered strains of the bacteria prevalent in those countries. The pilot committed funds for a new vaccine covering additional strains common in low-income countries.

"The idea was to accelerate clinical trials and the construction of manufacturing facilities to produce at a scale needed for a global vaccination program," Snyder says.

The pilot pneumococcal program rolled out vaccines credited with saving the lives of 700,000 children under the age of five around the world. "Our analysis suggests that the program sped the rollout of the vaccine by about five years compared to other programs spending a similar amount but having a more standard design," Snyder adds.

An advance market commitment program could also be useful to spur the development of a universal vaccine for coronaviruses or flu, according to Snyder and co-authors of a study published in the Review of Economic Design.

One of the study's coauthors is Claire McMahon '22, a former student of Snyder's, whom he helped recruit to work as a research professional at MSA over the past two years. A star economics and math major during her time at Dartmouth, McMahon is headed to the PhD program in economics at Harvard in the fall on an NSF fellowship.

Current Dartmouth students including Harrison Dahl '26, Timothy Mellis '26, and Clay Socas '26 have been working as research assistants part time at the MSA while they take classes. "As the director of undergraduate research for the Department of Economics, it's exciting to see opportunities come up for students to hone their research skills on projects with real-world impact," Snyder says.

Tackling global challenges through innovation

Shortly after it was founded, the MSA launched the 2023 Innovation Challenge, which promised to reward up to $2 million total in prizes and milestone payments to innovators with the best market-shaping ideas in biosecurity, pandemic preparedness, and climate change. Three winning proposals were selected from nearly 190 submissions from around the world.

The first proposal aims to encourage the development of broad-spectrum antivirals to help prepare for another pandemic. The second hopes to spur the creation of rapid diagnostic tests for neonatal sepsis, saving babies' lives while simultaneously cutting down on unnecessary antibiotics, which helps mitigate antibiotic resistance. The third looks to reward pharmaceutical researchers that find alternative uses for existing generic drugs, possibly unearthing new cures at low cost.

In addition to these health projects, MSA faculty co-directors Snyder and Glennerster served as advisors on the creation of Frontier Climate, an advance market commitment to buy over $1 billion of permanent carbon removal between 2022 and 2030 using a variety of nascent technologies. The MSA is thinking about how they would design an even bigger advanced market commitment in this arena. "Say we had a $10 billion program—how would you organize that, and what would it look like?"

MSA is also partnering with the International Food Policy Research Institute to promote the development of climate-resilient crops in developing countries.

And with its "Atlas of Innovation" project, the MSA aims to design a web tool that policymakers could use to help inform funding decisions.

"Policymakers could use the tool to say, 'I have this problem; what would be the right funding mechanism? Would it be push or pull? If it's pull, what sort? Would it be a prize? Would it be a milestone payment? Would it be an advanced market commitment? Would it be an advance purchase commitment? If it's on the push side, should it be R&D subsidies? Field building?'" Snyder explains. "We're putting together a decision tree that lets them explore different paths."

The Sloan grant will help Snyder and coauthors analyze deeper economic principles behind provisional answers to such questions.