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Launch Vehicles: An Economic Perspective
Launch Vehicles: An Economic Perspective*
This paper examines the launch vehicle industry as much as possible from a purely economic perspective, recognizing the legal, political, and security dimensions of the industry, but attempting to isolate as many of them as possible from the analysis. What could the industry look like if a free and open market approach were adopted? Would decisions that NASA and the U.S. Government made in the past have been radically different? What are the prospects for the future if decision-makers were to cut the industry free of all but the most necessary controls and let the market provide the services? This paper cannot answer all of these questions, but provides an analysis of the
industry that has not been adequately considered by prior analyses.
This analysis is very relevant today as the appearance of entrepreneurs along with the entry into the industry of a number of new nations with robust launching capabilities could open up domestic and international competition to an extent that previously never existed. How long can the governments of major space-faring nations continue to use the political system to control all aspects of launch decisions? What cost and price efficiencies might be forthcoming if launch services were “just another commodity.” Can private companies survive without government support in this very high-risk business that requires very large up-front capital investments?
Beyond the history and speculation about the future, another window on these questions is provided by a brief retrospective review of the lessons learned from several of the many new U.S. Government launch vehicle initiatives that involved partnerships between the government and the private sector. This study will use as an example the X-33/Venture Star initiative. These initiatives all failed to develop new operational vehicles. Their failures were a combination of technical factors and management/economic factors. We will focus on the latter, which can be just as detrimental to the success of a new high-technology program as a technical failure. Often these economic factors have been overlooked or misapplied by technical agencies dominated by an engineering or scientific culture.
*This work was performed under NASA Grant #NNG04GN66G.
This paper examines the launch vehicle industry as much as possible from a purely economic perspective, recognizing the legal, political, and security dimensions of the industry, but attempting to isolate as many of them as possible from the analysis. What could the industry look like if a free and open market approach were adopted? Would decisions that NASA and the U.S. Government made in the past have been radically different? What are the prospects for the future if decision-makers were to cut the industry free of all but the most necessary controls and let the market provide the services? This paper cannot answer all of these questions, but provides an analysis of the
industry that has not been adequately considered by prior analyses.
This analysis is very relevant today as the appearance of entrepreneurs along with the entry into the industry of a number of new nations with robust launching capabilities could open up domestic and international competition to an extent that previously never existed. How long can the governments of major space-faring nations continue to use the political system to control all aspects of launch decisions? What cost and price efficiencies might be forthcoming if launch services were “just another commodity.” Can private companies survive without government support in this very high-risk business that requires very large up-front capital investments?
Beyond the history and speculation about the future, another window on these questions is provided by a brief retrospective review of the lessons learned from several of the many new U.S. Government launch vehicle initiatives that involved partnerships between the government and the private sector. This study will use as an example the X-33/Venture Star initiative. These initiatives all failed to develop new operational vehicles. Their failures were a combination of technical factors and management/economic factors. We will focus on the latter, which can be just as detrimental to the success of a new high-technology program as a technical failure. Often these economic factors have been overlooked or misapplied by technical agencies dominated by an engineering or scientific culture.
*This work was performed under NASA Grant #NNG04GN66G.
43 pages, ebook
Published September 1, 2005
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