The More Climate Skeptics There Are, the Fewer Climate Entrepreneurs
MARCH 16, 2017
A drug company must incur a large fixed cost to do the basic research, so it has strong incentives to predict what the demand for the drug will be if its research succeeds. The higher the market demand for a drug, the greater the probability that at least one drug maker conducts basic research. In our model, a rational agent demands climate-adaptation products in order to increase the chance that they survive to enjoy future consumption.