Speaker
Description
This paper develops a dynamic general equilibrium integrated assessment model of the space economy that explicitly links economic activity on Earth with satellite operations in orbit. The model incorporates a space environmental externality in the form of orbital debris, which accumulates endogenously through launches, on-orbit operations, and collisions, and generates damages to space capital. We characterize the decentralized competitive equilibrium in which economic agents do not internalize the social cost of debris accumulation, corresponding to a business-as-usual (laissez-faire) outcome, and contrast it with the socially optimal allocation chosen by a central planner who internalizes the debris externality. Methodologically, the paper proposes a fixed-point algorithm to compute decentralized equilibria in dynamic growth models with environmental externalities. The decentralized equilibrium is obtained by iterating on the debris stock trajectory while repeatedly solving a nonlinear programming problem in which agents take debris-related damages as exogenous. The framework allows for a quantitative comparison between decentralized and socially optimal outcomes in terms of welfare, orbital environmental quality, and the accumulation of both terrestrial and space capital. The results highlight the magnitude of the inefficiencies generated by unregulated space activity and provide a tractable platform for evaluating policies aimed at preserving the long-run sustainability of the orbital environment.
| Which section would you like to submit your abstract to? | Session 9: “Space debris mitigation policies” |
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