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A dynamic investment model for satellites and orbital debris

Author

Listed:
  • Anelí Bongers

    (Department of Economics, University of Málaga, Spain)

  • José L. Torres

    (Department of Economics, University of Málaga, Spain)

Abstract

This paper develops a dynamic investment model for satellites and studies the economic consequences of orbital debris for commercial outer-space activities. Spacecraft launches and other outer-space human activities produce pollution (i.e., orbital debris), which represent a hazardous negative externality increasing the risk of collision and the destruction of satellites. We regard outer space as a global common resource, where firms operating satellites maximize profits and do not internalize the social cost of orbital pollution. We simulate the calibrated model to estimate how debris affects the optimal quantity of satellites and launches, and the number of satellites destroyed by collisions. We find that the optimal quantity of satellites is a negative function of the amount of debris. The paper derives a simple expression for the maximum number of satellites to prevent the Kessler syndrome. For the baseline calibration of the model, the estimated threshold for the maximum number of satellites in orbit is about 72,000. The model is simulated to study the effects of a decline in the launch cost and the increasing number of satellites per launch.

Suggested Citation

  • Anelí Bongers & José L. Torres, 2021. "A dynamic investment model for satellites and orbital debris," Working Paper series 21-11, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:21-11
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    References listed on IDEAS

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    1. Marcellus S. Snow, 1975. "Investment Cost Minimization for Communications Satellite Capacity: Refinement and Application of the Chenery-Manne-Srinivasan Model," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 621-643, Autumn.
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    More about this item

    Keywords

    Outer Space; Satellites; Launches; Debris; Risk of collision; Kessler syndrome;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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