Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Thematic Session: Space Economics
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This session features both theoretical and empirical research on space economics. Rapid increases in private sector activities in Earth’s orbits are leading to congestion and creating pollution (satellite debris), raising costs for current and future space users. These challenges require policy design and implementation that tailor familiar tools such as pollution taxes and tradeable permits to the distinct peculiarities of the extraterrestrial environment. The Kaffine and Rao paper and the Rouillon paper focus upon the challenge of managing congestion in orbit. Kaffine and Rao present a state-of-the-science integrated assessment model, combining economic modeling with physical models of the space environment, and find that the observed distribution of satellite orbits is well-explained by profit-maximizing satellite operator behavior. Rouillon shows how monopolistic competition between satellite service providers in Earth orbit leads to suboptimal outcomes that may be corrected via two policy approaches. The Bongers and Torres paper and the Rieder and Wagner paper focus on the complementary topic of managing satellite debris generated in congested Earth orbits. Bongers and Torres present an empirical analysis that quantifies the social cost of orbital debris using projections from an integrated assessment model linking economic activity with the space environment. Rieder and Wagner propose a large regional satellite debris cap-and-trade program, arguing that in addition to having good economic theory properties, tradeable debris permits are more likely than Pigouvian taxes to be implemented within the existing regulatory and political environment. Taken together, the session’s papers comprise an introduction to the emerging research area of space economics, showcasing policy-relevant results of interest to all environmental and resource economists. | ||
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Monopolistic competition in a limited orbital space University of Bordeaux, France 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. Finally, we identify a pair of economic instruments capable of correcting these market failures and decentralizing an optimal state On the Social Cost of Orbital Debris University of Malaga, Spain Orbital debris represents a global environmental externality comparable to terrestrial ones and imposes a social cost on humanity. This paper quantifies the Social Cost of Orbital Debris (SCOD) using projections from an Integrated Assessment Model (IAM) linking economic activity with the space environment. The model generates optimal trajectories for orbital debris emissions and consumption for estimating the SCOD. Our findings indicate that the SCOD is about $84,200 per piece of debris larger than 1 cm in 2023, based on a 1.5% social discount rate and a relative risk aversion parameter of 1.5. Collision avoidance technologies significantly reduce the SCOD. The Law and Economics of Tradeable Satellite Debris Permit Market Design Rochester Institute of Technology, United States of America Significant growth in orbital commerce is generating satellite debris that requires policy intervention. Inspired by the recent FuelEU Maritime Regulation that restricts port access to ships that participate in the EU carbon emissions trading system, we propose the US leverage access to its large satellite services consumer market to establish a regional satellite debris tradeable permit market that could become a global market. The US Federal Communications Commission could add debris permit trading to its current regulations that apply to any satellite accessing the US market. We describe the theory behind such a market and practical steps for launching it. Do economic principles explain orbital usage in space? 1University of Colorado Boulder, United States of America; 2Rational Futures While the global space economy continues to rapidly grow, and public policy challenges related to satellites and debris in orbit emerge, there is surprisingly little evidence connecting theoretical economic frameworks with observed orbital usage. Using a state-of-the-science integrated assessment model combining economic modeling with physical models of the space environment, we find the observed distribution of satellite orbits is well-explained by profit maximizing satellite operator behavior. Furthermore, we find strong evidence that collision risk plays a key deterrence role. Finally, the observed location of the largest satellite constellation, Starlink, is consistent with a “sole owner” over particularly economically desirable altitudes. | ||