6/30/2004

Commercializing Space

I am sure most of us have heard of the folks taking the building of spacecraft into their own hands, right? Well for those of you who haven't heard, the worlds first privately funded space mission is about to go down. Twenty six groups are racing for the Ansari X-prize of 10 millions dollars. A Spacecraft funded by Paul Allen, Co-founder of microsoft, is one of these groups. Anyways, the mission is that one of these groups must launch three people at least 62 miles into space, twice, within a period of two weeks. Wow.

So what does this have to do with economics? Everything. Through NASA, the government has monopolized the space industry for a long time, maybe too long. In fact, this may have led NASA to become a lazy monopolist, where they have been enjoying the position that they are in rather than pushing for efficiency. We could probably toss in a little X-inefficiency factor there as well. So why hasn't anyone been able to break down this space monopoly? I could assume that there were quite a few barriers to entering this market, including NASA being government sanctioned and sponsored, having unlimited military supply, the necessity of havings lots of money for startup and indivisible set up costs, and more.

The good thing is, NASA recognizes the stagnant predicament it is in, and certain influential people, like President Bush, are trying to step up to the plate and better the situation by creating a "new vision" for NASA. Their idea for a new vision was "to commercialize space". So, now that the barriers are being stripped away, we now that other profit maximizing firms or individuals will compete away this monopoly, and in the face of new competition, NASA will improve its efficiency. Enter- a new space age!

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