The Price of Discovery: A Model of Scientific Research Markets

Abstract

Large scale scientific projects often require enormous investment on the part of their patrons to develop and maintain new technologies like particle accelerators and grid computing systems. Data suggest that funding for such research is increasingly concentrated into a small number of major grants awarded to just a handful of successful labs. But is this the most efficient market design for promoting discovery? In this chapter, I propose a modified solution to the monopsony profit maximisation problem that specifies the conditions under which patrons should invest in one or several labs for a given research project. I apply the model to two prominent case studies and identify the key indicators that policymakers should consider when deciding how best to fund new scientific research.