Oligopoly competition between satellite constellations will reduce economic welfare from orbit use

Area of Science:

• Space Economics
• Satellite Technology
• Environmental Economics

Background:

• Orbital space supports critical services including communication, navigation, and Earth observation.
• Increasingly, satellite constellations in low-Earth orbit are launched by firms operating in oligopolistic markets.
• Understanding the economic implications of orbit use is vital due to growing commercial and national interests.

Purpose of the Study:

• To analyze how oligopolistic competition shapes orbital space allocation.
• To compare economic welfare under duopolistic firm competition versus public utility management of orbital space.
• To quantify the economic impact of imperfect competition on orbit utilization.

Main Methods:

• Economic modeling of orbital-use patterns under duopoly.
• Analysis of profit-maximizing firms with collision avoidance systems.
• Comparison of market equilibrium with a welfare-maximizing public utility model.

Main Results:

• Imperfect competition reduces economic welfare from orbit use by up to 12% ($1.1 billion USD) annually.
• Oligopolistic competition distorts the allocation of orbital space.
• The direction of distortion (larger or smaller constellations) depends on the level of environmental damages.

Conclusions:

• Orbit-use management is a critical policy-relevant area for economic research.
• Findings highlight the need for effective regulation to balance commercial interests and economic welfare.
• Future research should explore diverse orbit-use management strategies for sustainable space exploration.