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The space industry may result in a monopoly in the future


Elon Musk's developments in his rocket “the starship” has created fear for rivals and competitors that it will dominate US deep space exploration.


“The Stateship” is planned to help take humans to Mars, potentially playing a key role in one day establishing a human colony on Mars. At nearly 400ft, the new SpaceX rocket will eventually be taller than the Saturn V that took Nasa’s Apollo missions to the moon. Furthermore, its 33 engines will deliver twice the thrust than Saturn V.


With the commercial space industry growing rapidly in recent years, other private businesses are hoping to increase their market share (percentage of total sales in an industry generated from a particular company).


Faith Ozmen, the co-founder of Sierra Nevada Corp who is a private US company that has been contracted by Nasa to fly cargo to the International Space Station, has raised her concerns. She raised the issue of monopolies within the market when she said “if you’re not careful, SpaceX will be the only game in town”.


Other rivals have also complained that SpaceX risks squeezing out other firms that haven’t achieved its scale yet, and so don’t enjoy its funding advantages.


The Commercial Space industry is particularly susceptible to monopolies, which is when one firm owns the majority of the market share.


The reason why the market is more at risk than others is because of the many high barriers to entry.


For starters, space travel is expensive, meaning firms need an extremely large level of savings to fund projects. Furthermore, they must have the financial power to borrow money from banks and gain investors.


Another point to make is that there is a limited number of experts in the field of space travel. Therefore, with supply low, salaries must be high to attract employees. This may be difficult if you are a business entering the field, competing against big names like NASA and SpaceX to attract experts.


There are a variety of issues that a monopoly in the space industry causes.


For starters, regarding space tourism, prices may be ridiculously high, further exacerbating issues with inequality. Whilst the rich pay hundreds of thousand to go into space for a matter of minutes, millions on earth may be struggling to feed themselves.


Furthermore, a space operator owned by a private firm could, for example, limit other firms who want to use their facilities. For example, fibre optics produced in space where there is zero gravity are much better than those on earth, as they are cleaner and more valuable. Therefore, a space firm could prevent some firms from using their facilities, whilst granting access to others. This would mean one company would have a massive advantage, and could potentially lead to the monopolisation of other markets.


However, it must also be recognised that there are benefits to a space monopoly.


For starters, with the benefit of increased economies of scale (when a firm's average costs fall because of its increasing size), firms will have more revenue. This could be spent in further innovation and investment into space travel, further increasing discoveries in and the potential of Space.


Musk’s space company, SpaceX, does have a long way to go, however. Some crucial steps include winning the regulatory clearance to launch “Starship” from its Texas site and showing that it can reliably reach space whilst returning both the rocket’s stages for reuse. This last step is essential for reducing launch costs.


Therefore, the course of space travel is still uncertain, and may not go the route of the predictions.

 

Written by Charlotte Hurst

Research compiled by Hugo Denage

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