January 17, 2024

Advance market commitments for industrial policy?

What if we administered our industrial policy as a collection of advance market commitments?

Noah Smith wonders if we have the wherewithal to actually execute our industrial policy effectively.

I wonder if we could sidestep some of these problems entirely.

The funding mechanism could have taken the form of pre-commitments or prizes. We could have promised lump sum payments to be made to the companies producing the desired output, when and only when that output is actually produced and sold.

Wouldn’t this have been simpler to administer, taking NEPA out of the picture, while also directly incentivizing quick results?