In May of 2020, SpaceX made history as the first private company to send humans into space. This marks not only a tremendous technological achievement, but also the first indication that an entirely new “space-for-space” industry — that is, goods and services designed to supply space-bound customers — could be close at hand. In the first stage of this burgeoning economy, private companies must sell to NASA and other government customers, since today, those organizations are the only source of in-space demand. But as SpaceX has demonstrated, private companies now have not just the desire, but also the ability to send people into space. And once we have private citizens in space, SpaceX and other companies will be poised to supply the demand they’ve created, creating a market that could dwarf the current government-led space industry (and eventually, the entire terrestrial economy as well). It’s a huge opportunity — now our task is simply to seize it.

After decades of centralized control of economic activity in space, NASA and U.S. policymakers have begun to cede the direction of human activities in space to commercial companies. NASA garnered more than 0.7% of GDP in the mid-1960s but is only around 0.1% of GDP today. Meanwhile, space has become big business, with $300 billion in annual revenue.

The shift from public to private priorities in space is especially significant because a widely shared goal among commercial space's leaders is the achievement of a large-scale, mainly self-sufficient, developed space economy. Jeff Bezos has stated that the mission of his firm Blue Origin is "millions of people living and working in space." Elon Musk, founder of SpaceX, has laid out plans to build a city of a million people on Mars within the next century. Both Neil deGrasse Tyson and Peter Diamandis have been given credit for stating that Earth's first trillionaire will be an asteroid miner. Such visions are clearly not going to become reality in the near future. But detailed roadmaps to them are being produced, and recent progress in the required technologies has been dramatic. If such space-economy visions are even partially realized, the implications for society will be enormous. Though economists should treat the prospect of a developed space economy with healthy skepticism, it would be irresponsible to treat it as science fiction.

In this article, I provide an analytical framework — based on classic economic analysis of the role of government in market economies — for understanding and managing the development of the space economy.

NASA's fabled Faster, Better, Cheaper initiative sped up the agency's spacecraft development. But when missions began to fail, it was faulty organizational learning--not hardware--that was to blame.

In 2017, the Trump Administration made a bold claim - that they would return the next man and the first woman to the lunar surface by 2024, this time to establish a sustainable presence to enable further exploration in the solar system. With the Artemis Program, NASA has demonstrated an interest in bolstering public-private partnerships and developing an international coalition interested in collaborating in lunar exploration. A central piece of infrastructure will be the Lunar Gateway, an orbiting habitat and command module in cislunar space. Should NASA prioritize the Lunar Gateway, especially considering its history managing the International Space Station?

In building the International Space Station (ISS), NASA opened the door to the development of a robust in-space economy in low-Earth Orbit, and yet the decision to build the station, and continue to extend its lifetime, placed a huge burden on NASA's Human Spaceflight budget. Should NASA continue to invest in the ISS? Or is it possible for the agency to facilitate the commercialization of the Station and move beyond low-Earth Orbit?

After having proven its base technology (3D printing) through NASA solicitations and contracts, Made In Space was searching for a viable commercial application. But the business case for the leading candidate, high-quality fiber optic cable for use on Earth, remained uncertain. In 2019, Made In Space secured a major contract from NASA for early work on a much grander project, called Archinaut, to build architectures in space that would enable off-Earth habitation. Was that opportunity a more promising path for Made In Space, or did its ambition risk distracting Made In Space from its more managed, incremental strategy? Which strategy would enable MIS to retain its central place in facilitating the development of the space economy?

From the time he transformed the world of online banking, Elon Musk had established himself as a bold innovator eager to challenge the status quo in hopes of, as he put it, advancing human society. After selling X.com to PayPal in 2002, he founded a series of start-ups in pursuit of that dream, starting with Space Exploration Technologies (SpaceX). Hoping to "make human life multiplanetary", Musk aimed to establish the first Mars civilization, but was unable to procure rockets that would be cheap or reliable enough to make the journey. Over the course of the next decade, SpaceX would develop a line of revolutionary rockets that transformed the commercial space launch industry. Using reusable rockets to exploit the benefits of economies of scale, SpaceX cut costs to orbit by a factor of 18 and captured a large percentage of the global launch market, once thought to be inaccessible to newcomers in the industry. But after a remarkable decade, Musk's original goal to reach Mars seemed both within reach and impossibly optimistic. SpaceX had proven technologies that would be critical in supporting a crewed mission to Mars, but the cost to get there was estimated to be well above $200 billion dollars in 2014. While revenues from the launch services market were impressive, they were nowhere near the $200 billion needed to develop a Mars civilization. Would there be enough demand for launch services to make Elon Musk's vision a possibility, or would SpaceX have to find other ways to get there?

Chad Anderson had reason to be proud of his young space-focused investment firm, Space Angels. Since becoming CEO, Anderson had overseen growth along multiple dimensions, and Space Angels was “the preeminent name in space finance” according to one prominent space investor. But Space Angels was not alone, as high-profile rocket launches, rapid progress in satellite and other technology, and a wave of entrepreneurship had brought investors’ attention to the commercialization of space. Anderson believed that Space Angels—along with these other investors—was vital to the development of the market for commercial space activities. But success was far from guaranteed, as decades of grand visions of space commerce had gone unrealized. Did Space Angels have the right strategy and model to build a space economy and prove space skeptics wrong? How should it evolve along with that sector to ensure its place in it?

With one satellite aloft and in the midst of beta testing in late 2018, Analytical Space founders Justin Oliveira and Dan Nevius turned to critical questions about the pioneering startup's go-to-market, pricing, and business development strategy. Analytical Space aimed to build and operate a constellation of inexpensive satellites that would receive and relay to the ground data gathered by orbiting Earth observation satellites, thereby speeding and increasing the amount of data their operators could collect and sell to clients in the multi-billion market for information on crops, weather, and other observable changes on Earth. The cofounders now needed to select the best initial customers, validate demand for their unique data relay service, and establish pricing that would both spur adoption and impress investors ahead of their next financing round.

The Indian Space Research Organization (ISRO) achieved global acclaim by launching successful missions to the moon and Mars at a fraction of the cost of prior Western missions. It is now faced with an important strategic dilemma-whether to continue exploring deep space in collaboration with NASA and other leading agencies, whether to leverage its infrastructure for societal uses, or whether to exploit a commercial opportunity related to launching small, handheld cubesats.

The case explores the basis for ISRO's cost advantage vis-à-vis western entities, as well as its resource constraints and human capital considerations as it makes this important strategic choice for the future.

Planetary Resources, Inc. (PRI) had a bold, some said crazy, vision: to mine asteroids. One might have assumed that developing the right technology would be the greatest challenge facing PRI. But even if the fledgling company could develop and deploy the sophisticated imaging, prospecting, and communication capabilities required for mining asteroids, two additional obstacles meant success was not guaranteed. First, uncertainty remained over whether, and how, property rights to resources mined in space would be enforced.

PRI's leadership's challenge was to anticipate, and perhaps shape, how this uncertainty would be resolved. Making that balancing act more difficult was a second factor: a complex and underfunded U.S. regulatory infrastructure that threatened to slow PRI's progress and escalate costs.

Jeff Bezos, six years after starting a revolution in retailing with Amazon.com, turned his life-long passion for space into a start-up, Blue Origin. Blue (as it was called) was a part of the New Space industry, a collection of startup aerospace engineering companies that were intent on disrupting the American space sector with new technologies, management approaches, and competitive pressure. NASA hoped to leverage New Space to outsource its near-Earth activities and refocus its own efforts on deep space exploration. One of the agency's main mechanisms for this shift of activities was its Commercial Crew Development program (CCDev), a multi-phase initiative launched in 2009. Blue participated in the first two rounds of CCDev, and by all accounts these had been win-win experiences for it and NASA.

The decision point of the case is whether Blue should participate in the third, much larger, and more complex, stage of CCDev. The trade-off facing Blue's leaders was between the legitimacy, expertise, and funding provided by working with NASA and the autonomy, efficiency, and independence threatened by working with NASA. How would Blue, with its clear respect for NASA but its desire (and financial ability) to set its own priorities, make this decision?

An engineer and technology entrepreneur, Nobu Okada, had turned a mid-life crisis into a bold-some would say quixotic-quest to prevent a tragedy of the commons at the global scale. Namely, Okada believed the accumulation of debris in near-Earth orbital space posed a serious threat to a vast array of critical satellites and, thereby, both the modern information economy and the future of human activities in space. Frustrated at what he saw as far too slow a reaction to the threat among major space powers, Okada planned to develop a spacecraft capable of adhering to, and redirecting, that debris. By lowering the costs of debris removal, he hoped to make it routine, even in the absence of government action.

As of 2016 his company, Astroscale, which had secured private funding years earlier, was nearing the first demonstration of the technology. This case is intended to help students understand how a tragedy of the commons develops in a specific, nearly textbook example. As important, this case is about potential solutions to the tragedy of the commons when the market and policy both fall short.

In early 2002, XM and Sirius were fighting for control of the emerging U.S. market for satellite radio. Each company targeted consumers in automobiles, providing 100 channels of CD-quality audio for a monthly subscription fee of $10-$13. Wall Street analysts predicted that these companies would be profitable by 2005-2006, but investors were increasingly skeptical of ventures that required huge, irrevocable bets on customer acquisition and infrastructure. This case describes the business models of the satellite radio companies, the technology they employed, and their target markets. Poses questions about their pricing strategies, strategic partnerships with auto manufacturers, and whether they should develop interoperable radios that receive either company's signals.

Space Data Corp. plans to partner with the U.S. National Weather Service to place transceivers on weather balloons and thereby create a national mobile communications network. The company is in the late development stages and is planning to launch a regional test that will demonstrate its ability to provide paging and messaging. It intends to sell its service to existing mobile carriers, such as Skytel and Verizon, rather than directly to end users.

This case illustrates how Space Data has applied flexible business processes throughout its initial market research and technology development to create a system that can make optimal use of its limited resources and respond rapidly to changing conditions. As the case concludes, the executive team at Space Data faces three opportunities, each with very different costs and benefits for the company. It can proceed with a regional test of paging and messaging as planned, leap forward to develop a more complex but potentially more lucrative voice service (forgoing a regional test), or make a transition to the small but financially stable telemetry market.

Examines the history of Iridium Communications, a provider of mobile satellite services. Discusses the genesis of Iridium's technical design, then follows the venture through various stages of development. Describes Iridium's attempts to build a subscriber base after the launch of commercial service, ending with the company's filing for Chapter 11 in 1999.