Published on 15 July 2024
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Space possibilities for our grandchildren: current and future economic uses of space

Space, once dismissed as mere science fiction, is now a vibrant marketplace driven by economic incentives, decreasing launch costs, and emerging new markets, warranting more attention from economists, write Alessio Terzi and Francesco Nicoli.

Abstract

For too long, space has been dismissed as a science endeavour at best, and a delusionary science fiction fantasy at worst. In this article, we make three fundamental points. First, with strong commercial activity taking place in Low Earth Orbit since the late 1980s, space already today is a marketplace and therefore responds predominantly to economic incentives. Second, launch costs have been on a very steep downward trend hitherto, even by historical comparison to other transport technologies. Under a set of credible quantitative scenarios, leveraging Wright’s Law, we show how these costs are likely to drop further in a significant way by the end of this decade, and more so in the 2030s. Looking at it through a trade economics framework, we argue that we are entering a period where (space) trade frictions are falling, and new markets will be created as a result. Third, we propose a taxonomy to help think about the creation of further value added in space going forward. For all these reasons, we maintain that space should be worth greater attention by the economics profession.

Authors

Dr Alessio Terzi

Affiliated Researcher

Alessio Terzi is an economist working at the intersection of academia, think-tanks, and policy. He is a Lecturer in Public Policy at Cambridge University and an Adjunct Professor in Economics...

Dr Francesco Nicoli

Dr Francesco Nicoli is Assistant Professor of Political Science at the Politecnico Institute of Turin. He also serves as Professor of Political Economy at Gent University, is Affiliate Fellow at the...

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