Why are we launching so many low Earth orbit (LEO) satellites? Is it to bridge the global digital divide and enable real-time global connectivity? Or is there insufficient evidence of net social benefit when accounting for their extensive external impacts?
The cost of manufacturing and launching a single communication satellite constellation has been estimated at over £2.1 billion, in addition to the continuous operational costs of ground station telemetry and regulatory compliance.
Supporters of space-based internet argue that the productivity gains, rural connectivity, and disaster-response capabilities arising from these constellations fully justify their high private costs. Furthermore, they point out that global satellite networks provide critical infrastructure for weather forecasting and maritime logistics. Viewed this way, some economists suggest that orbital telecommunication infrastructure behaves like a merit good.
However, astronomers and space safety coalitions dispute these claims. They point out that a single large constellation can ruin up to 40% of deep-space optical telescope images. The external cost generated by these orbital networks is substantial, estimated to exceed £18 000 000 annually in lost research efficiency, collision avoidance maneuvers, and debris mitigation. This includes the risk of Kessler syndrome, orbital debris cluttering active paths, and atmospheric chemical alterations during satellite re-entry.
Define the term 'external cost' (Extract F, line 11).
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.