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Michael McLean @michael_mclean
The History and Recent Developments
Market Structure of Space Launch Services
• In 2013, revenues from global commercial actors were es?mated at ~$256.2B
• Of that, the manufacturing supply chain for spacecraJ systems accounted for ~$85B
Primer
• The industry has origins in the early 1900s with the first patents being filed for rocket designs by Robert Goddard
• In response to the Soviet launch of Sputnik I in 1957, the USA began large scale investments in space systems
• Ini?ally dominated by government actors
Brief History
The Space Stack
Downstream: Consumer Applica:ons
Operators: Launch service, and satellite service
Tier 1&2: Design and manufacturing of equipment and subsystems
Tier 3&4: Material & Components suppliers Scien:fic and engineering consulta:on
Primes: Space system integrators
Four Main Factors
• Civilian R&D budgets
• Ins?tu?onal budgets
• Regulatory Frameworks
• Human Capital
Industry Inputs
Sample of Outputs
• Rocket manufacturing and launch ac?vi?es
• Launch Insurance Market
• Satellite telecomms
• Earth Observa?on, GPS, Weather tracking
• Human Spaceflight
• Launch Insurance Market
Industry Outputs
Commercial Segment
• Higher elas?city of demand since they answer to shareholders
Government Segment
• Lower elas?city of demand since projects are in na?onal defense and scien?fic interests
Segmenta:on
Cournot Oligopoly Structure
• In the Cournot game, if the fixed-‐costs are too high, the equilibrium # of firms is 0. The space launch market followed this structure in its early days, so governments had monopolies on space access.
• The lower the fixed cost, the higher equilibrium # of firms, so as costs fell, there were commercial entrants
Government Actors
• In 2006, Boeing and Lockheed merged their space ventures, crea?ng the United Launch Alliance (ULA)
• This created a pure monopoly in the defense satellite market, which has been just recently been opened for compe??on
• In 2014, a $11B contract was awarded for 27 launches without compe??on
Merger Concerns
Atlas V
Analyze the 2006 Lockheed & Boeing Merger
• Inves?gate the consolida?on in the defense market
• Are there any indicators of an?-‐trust? If so, what is a possible solu?on?
My Proposal
Data
OECD (2014), The Space Economy at a Glance 2014, OECD Publishing, Paris. DOI: hCp://dx.doi.org/10.1787/9789264217294-‐en
Images
hhp://upload.wikimedia.org/wikipedia/commons/1/1f/Atlas_V_551_with_New_Horizons_on_Launch_Pad_41.jpg
hhp://www.spacex.com/media-‐gallery/detail/126606/4741
hhps://www.nasa.gov/sites/default/files/16242684611_b978aaa7be_o_0.jpg
Works Cited