Our text book, written by Ivan Png and Dale Lehman, describes managerial economics as "...the science of directing scarce resources in management of a business..." and highlights the efforts of Boeing vs. Airbus as an example. Well, another fascinating display of managerial economics in the aerospace industry is being played out in Florida.
With the retirement of NASA's Space Shuttles, demand did not go away. If anything, demand has risen due to NASA's role in the ever expanding ISS (International Space Station). Over the past year, the only source of "space travel supply" has been furnished through Russia's space program at, true to economic form, a steep cost. However, with the successful flight of the Falcon rocket, SpaceX has pioneered a new market in private supply missions to the ISS. And as is consistent with any new or successfully emerging markets, new entrants are not far behind (affecting long run supply curves).
Florida has a long standing relationship with NASA and is not interested in being passed over in a new space race by Texas. Instead, Florida is battling for SpaceX's attention (and other potential entrants such as Virgin Galactic and Spaceship Company) by purchasing 150 acres of land (located at the Kennedy Space Center) from NASA. Although Florida officials have not empirically stated that this land purchase is specifically for SpaceX's use, they nevertheless have plainly spoken about their desire to build a commercial launch complex. It will be very interesting to observe whether Texas responds to this move and how this will affect the efforts of other commercial startups.