Bongers, A., Molinari, B., Rouillon, S. and Torres, J. L. The Foundations of the Economics of the Outer Space: A premier overview.
This version: June 2024.
Abstract: Although it is probably too early to define a new field of economics named “Economics of the Outer Space”, the arising importance of the outer space for scientific, economic, and social development is beyond discussion. Nowadays, commercial satellites offer a variety of vital services to Earth’s consumers at the cost of congesting and polluting the space with orbital debris. However, this is just the beginning of the history, and several new commercial exploitations of the outer space will appear in the next future, with the consolidation of an almost autonomous industry in the space, further congesting and producing further market failures. This paper reviews seminal and initial works in this new field and discusses the connection with existing well-established fields in economics. Human activities in the outer space involves a number of economic and legal issues, related to regulation and property rights, congestion, pollution, militarization and weaponization, and exploitation of natural resources, that should be addressed as soon as possible to mitigate conflict among spacefaring agents and loss of welfare for the whole humankind. Finally, we put forward some suggestions for future research directions in this promising and highly unexplored research area.
Keywords: Outer space; Satellites; Earth’s orbit; Orbital debris; Anti-satellite weapon systems; Space industry; Satellite data.
Rouillon, S. Monopolistic competition in a limited orbital space.
This version: September 2024.
Abstract: In a context of intense competition for access to the Earth’s orbit, we study a model of monopolistic competition in which satellites operators diversify the variety of satellite services. We put this in perspective with the accumulation of in-orbit fragment debris and the risk it poses for the sustainability of orbital activity. Monopolistic competition leads to a sub-optimal outcome, in terms of both the number of satellites in orbit and the range of services offered. We show that monopolistic competition results in excessive orbit congestion, when Earth’s orbit carrying capacity is low and/or consumers’ preference for diversity is low, and always leads to an insufficient number of satellite services being offered. However, a strong consumers’ preference for service diversity, as it increases the market power of satellites operators, can mitigate congestion of the Earth’s orbit.
Keywords: Space economics; Orbital debris; Sustainability.
JEL classification: L1; L9; Q2.
Bongers, A., Ortiz, C. and Torres, J. L. DISE: A Dynamic Integrated Space-Economy Model for Orbital Debris Mitigation Policy Evaluation.
This version: October 2024.
Abstract: This paper presents the Dynamic Integrated Space-Economy (DISE) model, which is designed to study the economic implications of alternative policies aimed at mitigating orbital debris. The DISE model combines a standard neoclassical growth model with a physical space model for orbital debris dynamics. The economic model categorizes capital assets into two types: Earth’s capital and Space’s capital (i.e., satellites). DISE is intended to calculate the cost of space debris and its impact on the global economy. The model is simulated for a 200-year period under different scenarios, including a clean space environment, laissez-faire, de-orbiting policy, debris-free launch systems, a combination of de-orbiting and debris-free launch vehicles, and collision avoidance.
Keywords: Outer space; Orbital debris; Satellites; Integrated Assessment Model; Mitigation policies.
JEL classification: D62; E22; H23; Q53; Q58.
Bongers, A. and Torres, J. L. On the Social Cost of Orbital Debris.
This version: February 2025.
Abstract: Orbital debris represents a global environmental externality in outer space, akin to terrestrial environmental externalities, imposing a social cost on humanity. Accurately quantifying this social cost is crucial for designing and implementing effective debris mitigation policies. This paper estimates the social cost of orbital debris (SCOD) using a methodology inspired by climate-change economics, particularly the approach used to calculate the social cost of carbon (SCC) through projections derived from integrated assessment models (IAMs). We introduce an IAM that links economic activity with space activity, modeling orbital debris emissions as a function of launches and collisions. The model generates optimal trajectories for orbital debris emissions and consumption, which are then used to estimate the SCOD. Our results indicate that the SCOD is approximately $84,200 per piece of debris larger than 1 cm for the year 2023 (in international US dollars), based on a 1.5% social discount rate
and an intertemporal marginal consumption rate of 1.5.
Keywords: Orbital debris; Integrated assessment model; Social cost of orbital debris.
JEL classification: D62; E21; E22; Q53; Q58.