A Physico-Economic Model of Low Earth Orbit Management

Sébastien Rouillon

Environmental & Resource Economics, 2020, vol. 77, issue 4, No 2, 695-723

Abstract: Abstract We analyze the externality caused by the accumulation of space debris, focusing on the long-term equilibrium induced by a constant rate of satellite launches. We give conditions such that the long-term population of functioning satellites is an inverted-U shape function of the launch rate. We compare typical ways of managing the orbit. The maximum carrying capacity is the maximum population of satellites that the space sector can sustain in the long run. The physico-economic equilibrium occurs under open-access to the orbit. The optimal policy maximizes the present value profit of the space sector. Finally, we discuss the use of standard economic instruments (command-and-control, tax and market) to regulate space activity in order to achieve an optimal outcome. A numerical application based on a realistic calibration illustrates all results.

Keywords: Space economics; Orbital debris; Sustainability; L1; L9; Q2 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s10640-020-00515-z

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