We explore economic aspects of the satellite launch industry, focusing on the crucial role of launch cost reductions in shaping long-run satellite industry trends. The market structure of the international launch industry was a stable duopoly (United States and Soviet Union) prior to the 1990s, an oligopoly dominated by the United States, Russia, the EU, and China, from 1995 to 2018, and by a dominant firm (SpaceX, United States) with a competitive fringe after 2018. Recent trends in the industry show a rapid growth in the number of launches, increased launch frequency, and greater international participation. Key economic factors contributing to the changes in the industry have been launch cost reductions, growth of commercial launches, and the emergence of mega-constellations of satellites. Further research is needed in this emerging field of economics to fully understand the economic forces shaping the future of satellite launches and space commerce.

The continued growth of orbital debris increases potential losses faced by commercial operators in Earth's orbits. Yet, there is no commonly accepted measure that describes the orbital debris environment from an economic perspective. This study begins to fill that gap by developing an Orbital Debris Economic Loss Index (ODELI) that measures and tracks the changes in the expected negative economic impact of orbital debris on satellite operators, both in aggregate and in specific orbits. Such information is valuable to the stakeholders, such as policymakers, commercial operators, and the public, in communicating valuable information about the economic state of the orbital debris environment.We illustrate the calculation of the index utilizing the data from 2012 to 2022. The analysis is based on the publicly available data and the Meteoroid and Space Debris Terrestrial Environment Reference (MASTER) orbital debris environment model. Our analysis suggests that the aggregate expected economic damage to Earth's orbits is increasing at a slower rate than the growth rate of the number of satellites or trackable pieces of debris objects. The slower rate of growth in ODELI indices from 2012 to 2022 is explained by a decrease in the average mass of satellites, a reduction in the real cost of placing satellites in orbit, and a commercial preference to launch satellites into orbits with lower debris density.The estimates of annual expected economic losses from debris collisions increased from $86 million to $107 million from 2012 to 2022, and the losses are concentrated in the low-Earth orbit (LEO). However, LEO had the smallest rate of increase in ODELI compared to other orbits. Medium-Earth orbit (MEO), which has the smallest contribution to the combined expected economic losses from debris on the Earth's orbits, experienced the fastest rate of increase in ODELI during the same period.

The rapid accumulation of orbital debris, coupled with the exponentially increasing number of satellites in certain regions of orbital space, impedes and may preclude long-term utilization of these resources. While voluntary satellite deorbiting guidelines are demonstrably ineffective in incentivizing firms to deorbit their expended satellites, we suggest interest-bearing deorbiting performance bonds provide an incentive mechanism that has minimal effect on firms' operating costs. Not only would this type of bond reduce the rate of growth in orbital debris, these bonds could be tradeable, thus establishing market prices for certain types of orbital debris, both stimulating the market for active debris removal and further encouraging investments in satellite robustness.

Through Monte Carlo simulations and a break-even analysis, this study monetizes the rising costs of orbital debris and space preservation. This study estimates the costs of allowing space debris to persist and proliferate using existing data and projections from the literature. This study assigns values to NASA's published space debris mitigation models to calculate the costs of space preservation. Estimating the costs of space debris has been hampered by a lack of information, owing primarily to commercial proprietary information. This study demonstrates how simple-realistic assumptions can transform sparse data into the foundation of a robust analysis. Furthermore, by conducting a break-even analysis of these costs based on defining quantitative variables in models, this study identifies the global cost savings and the likely timeline when the costs of space debris will equal the costs of space preservation. This study uses sensitivity analysis with alternative inputs to identify uncertainties in the costs of orbital debris and

We estimate the expected annual cost of satellite collisions with orbital debris and find that the expected annual loss for all orbits was $86-103 million in 2020. Nearly all expected losses, $79-102 million, were in LEO, and these losses represent approximately 0.16% of the value of operational satellites in that orbit. Over 70% of losses occurred in the 600-900 km orbital band. Commercial satellites’ share of expected losses is approximately one-third of expected total losses. These findings may have implications for policy, in particular relating to the market for active debris removal.

Orbital space is an economically and socially valuable resource that provides a vast array of satellite communication services for consumers, businesses, scientists, and governments. Among the socially valuable services provided, orbital satellites collect various types of environmental data relating to the earth’s surface and atmosphere. These data help scientists monitor and better understand the evolving terrestrial environment. When satellites are launched and undertake missions in orbital space, they create pollution in the form of orbital debris. Orbital debris can, and does, damage or destroy other satellites. National entities that utilize orbital space pledge to follow voluntary guidelines for minimizing orbital debris, but many do not comply. This non-compliant behavior, along with a substantial increase in the number of satellites in orbit, causes the density of the debris fields in orbit to increase, making it more likely that an increasing number of other satellites will be damaged or destroyed. The limiting case of this process is a “collisional cascade” which renders an orbit unusable. This scenario is broadly analogous to the effects of human-produced CO2, both in terms of the increasing economic and social costs of environmental damage over time and the difficulty in binding nations to international agreements. Because satellites are vital to monitoring terrestrial conditions and provide unique data on the current state of the global environment, we suggest there is a natural linkage for including orbital space in climate change negotiations. While this might complicate climate change negotiations, it could also usefully expand the overall bargaining space, providing new opportunities for agreement.

We explore launch-cost reductions for satellites in low-Earth orbit and find that from 2000 to 2020 per-kilogram launch costs decreased at an average annual rate of 5.5%, while altitude-adjusted average launch costs per kilogram decreased by 4.4% annually. The altitude-adjusted annual rate of decrease was 7.5% for commercial satellites and 3.6% for non-commercial satellites. Regression analysis reveals that declining satellite mass induced an annual 10.4% reduction in average per-satellite launch costs over the period under study. At these rates, average launch costs to lowEarth orbit will fall below $1000 per kilogram between 2045 and 2076 and $100 per kilogram by the next century.

We explore how economic forces contribute to the generation and accumulation of orbital debris. The current structure of economic incentives for using orbital space may result in an economic Kessler Syndrome, in which orbital space becomes economically unprofitable for commercial exploration. We use simulations of an economic model to compare the effectiveness of various policy choices in slowing the accumulation rate and reducing levels of orbital debris. These findings provide useful guidance for policymakers.

The study presents findings from theoretical economic models of business activity in orbital space. The effects of orbital debris levels on the economic costs of satellite operators and how economic forces contribute to the accumulation and mitigation of orbital debris are addressed. Using a dynamic economic model framework, the study forecasts future levels of debris and economic activity in orbital space under different policy choices.

In a dynamic investment framework with depreciation, we show incumbent satellite operators have incentives to "warehouse" a fraction of their assigned spectrum and orbital slots, keeping nonoperational assets in place, which reduces output, increases prices, and diminishes social welfare. Exploring three distinct market structures, we model firms' incentives to warehouse, and show conditions under which firms choose to warehouse rather than replace nonfunctioning satellites. We find a dominant firm with a competitive fringe produces more and longer duration warehousing relative to perfect competition or monopoly. Regulators could remediate warehousing by increasing a firm's marginal costs, or by increasing the probability of reallocating orbital slots that do not have a fully functioning satellite. (JEL L9, L5)

This chapter describes the fundamental role of media in economies. Media play multiple roles, including the provision of information which is vital to the efficient functioning of markets and political systems. The chapter includes a literature review describing the existing state of the media economics literature. Topics covered include the fundamental economic role of media, two-sided markets, the production and consumption of media, disintermediation of media, regulation, and the law and economics of media. For each of these topics the chapter reviews the potential impact of the Internet on traditional results in the media economics literature. The chapter concludes with a summary of overall trends in media.

Media industries are in transition to a new world involving digital distribution, social networks, and related technological disruption. This chapter describes the challenges and opportunities generated by this industrial shock. It further describes a variety of topics which are increasingly important for media economics scholarship. There have also been major innovations in research methods, more specifically econometric techniques, such as structural estimation, which are increasingly important for media scholars. Finally, government policy is generally not adapting as quickly to the technological innovations which have emerged in media markets. This chapter discusses open research questions for policy.

We construct a dynamic model of orbital debris that predicts an “economic Kessler Syndrome”, where orbital debris renders orbits economically unprofitable, precedes a “physical Kessler Syndrome”. Our model generalizes to any orbit subject to debris accretions or decrements.

Space debris, an externality generated by expended launch vehicles and damaged satellites, reduces the expected value of space activities by increasing the probability of damaging existing satellites or other space vehicles. Unlike terrestrial pollution, debris created in the production process interacts with firms' final products, and is, moreover, self-propagating: collisions between debris or extant satellites creates additional debris. We construct a formal model to explore private incentives to launch satellites and to mitigate space debris. The model predicts that, relative to the social optimum, firms launch too many satellites and choose technologies which create more debris than is socially optimal. We discuss remediation strategies and policies, and demonstrate that Pigovian taxes can be used to internalize the debris externality.

Space debris, an externality generated by expended launch vehicles and damaged satellites, reduces the expected value of space activities by increasing the probability of damaging existing satellites or other space vehicles. Unlike terrestrial pollution, debris created in the production process interacts with firms' final products, and is, moreover, self-propagating. Collisions between debris or extant satellites creates additional debris. We construct an economic model to explore private incentives to launch satellites and to mitigate space debris. The model predicts that, relative to the social optimum, firms launch too many satellites and under-invest in debris mitigation technologies. We discuss remediation strategies and policies, and calculate a socially optimal Pigovian tax.

As the telecommunications market transitions from POTS to VoIP, interconnection plays a key role. How will migration from a termination regime to a peering regime impact carriers and subscribers? Cunningham and Alexander model the potential results under conditions of both traffic symmetry and asymmetry. Competition for subscribers, they find, is the key factor in holding interconnection costs down, although possibly increasing prices for subscribers. Under symmetry, this may ultimately increase firms' profits. Under asymmetry, some firms will lose profits. The consequences of this may be somewhat offset by public policies. This has implications for universal service, antitrust law, and network neutrality.

A cable operator chooses to bundle or provide programs a la carte by striking a balance between maximizing total surplus and minimizing transfer payments to program providers. Using general demand and cost functions, we show that a cable operator's decision to bundle maximizes total producer surplus if the cable operator's bargaining power is sufficiently high, and that a cable operator in a weak bargaining position might strategically choose to unbundle viewer channels in order to enhance its bargaining position with individual program suppliers, even when this decision reduces total surplus. It is, therefore, plausible that regulations to cap market share or impose a la carte on cable operators may reduce total surplus, and absent offsetting increases in consumer welfare, such policy measures may reduce total welfare. Under more restrictive conditions, we extend the analysis and show that consumer and social welfare under bundling or a la carte depends on both bargaining power and advertising rates. Our results imply a monopolist does not necessarily increase deadweight loss, and under certain circumstances a monopolist's bargaining outcomes yield higher social welfare.