Pull mechanisms—funding mechanisms such as advance market commitments (AMCs) and prizes that pay for results—are having a moment. After the 2009 landmark pneumococcal AMC helped accelerate access to lifesaving vaccines, the model has been adapted well beyond global health: Frontier Climate’s AMC mobilized over US$1 billion for durable carbon removal, and the UK has recently announced new AMCs spanning areas including AI hardware and low-carbon concrete.
As interest in these mechanisms grows, one practical question is key: how big should a pull incentive be? Too small, and serious innovators won’t enter. Too large, and the program risks overpaying and wasting scarce resources.
In practice, policymakers and funders have often had to size pull incentives using rough heuristics—sometimes by benchmarking against the commercial revenues of comparable products—because there hasn’t been a simple way to translate uncertainty about costs, risk, and timelines into an order-of-magnitude commitment.
That’s why we’re launching a new Pull Incentive Sizing Tool on the Market Shaping Accelerator’s (MSAs) new website.
How the Pull Incentive Sizing Tool works
The tool is an order-of-magnitude calculator that turns three inputs into two practical outputs:
- Inputs: you can set the overall target probability of success, the per-attempt probability of success, and the expected cost per attempt
- Outputs: the implied pull size (in present-value terms) and the number of innovation attempts the incentive is designed to attract
→ Try the Pull Incentive Sizing Tool
Example: sizing an AMC to spur a methane-reducing livestock vaccine
MSA has been exploring an AMC for vaccines that can reduce methane emissions from livestock because an AMC can help bridge the gap between the large social benefits and smaller private incentives to innovate, and directly encourages adoption. But, how big does the AMC need to be to incentivize innovators to come into this space?
Here’s what “using the tool” looks like in practice:
- Pick the goal: Decide how confident you want to be that at least one viable product reaches the finish line (e.g., 70 percent, 80 percent, 90 percent). While there is not a correct target probability of success, we often start with 70 percent and then iterate balancing the trade-off between costs and the likelihood of innovation.
- Enter realistic R&D assumptions: For example, in the AMC for methane vaccines, we assume:
- Per-attempt success probability: 3 percent
- Present value expected cost per attempt: $1.8 million (reflecting staged failure and discounting)
- Read the implied “right-sized” pull (present value): The tool translates those inputs into the pull size needed to make enough credible entry rational for the target probability of success (and it also shows the implied number of attempts being incentivized).
- Translate that present value into an AMC people can actually budget for: For an AMC, rewards are per-unit subsidies paid over time, so you then convert the needed present value into a subsidy path and headline commitment. In the methane-vaccine example:
- A modeled AMC rollout totals about 92.3 million doses over the AMC life, with firm discounting (8 percent) and illustrative marginal production cost ($2/dose)
- That implies a per-dose subsidy of about $10/dose and a nominal payout total of $952 million (because payments arrive years later)
- If funds are in escrow earning a lower safe return (e.g., 2 percent), the expected total commitment in this example is $702 million
Bottom line
This tool helps you answer “how big?” in a systematic and transparent way. It is designed to help funders, policymakers, and program teams considering AMCs, prizes, or similar pull mechanisms. It helps turn a few key assumptions about cost, risk and timing into a first-pass estimate of scale, plus the implied level of innovation effort you’re trying to attract.
Driven by the insights we gleaned from our Innovation Challenge and led by former staff members (now pursuing PhDs in Economics at Harvard), this is a starting point, not a final answer. Feedback is welcome.
Explore the sizing tool, share it with your colleagues, and reach out if you have feedback or would like to learn more. Contact us at marketshapingaccelerator@cgdev.org.