The allocation of launch licenses

Notes: I will resume my review of Nozick next week; in the meantime, this new series of blog posts on the allocation of launch licenses by the FAA is just a short preview of my next work-in-progress.

Currently, any private company that wants to launch a rocket or other kind of spacecraft from the United States into outer space must obtain a special license from the Federal Aviation Administration (FAA) — specifically, from the FAA’s Office of Commercial Space Transportation. In brief, to get a launch license, the applicant must prove that it is able to take financial responsibility if the launch goes wrong and that the launch won’t threaten U.S. national security, but as you can imagine, this regulatory process is slow, costly, and cumbersome (see image below) — it can take up to six months to get a launch license from the FAA. (See here, for example.)

So, what if the FAA conducted auctions instead? As the great Ronald Coase taught us long ago, competitive auctions would not only generate revenue for the fisc; they would also require private companies to “internalize” the potential harmful effects of their actions in outer space. I will explain in greater detail in my next post why auctions are a far better method for allocating launch licenses than the current cumbersome system …

Lifecycle management process for License Tools to Facilitate the Licensing Process

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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5 Responses to The allocation of launch licenses

  1. A pay to play system? The best thing about an auction is that good faith is implied. Anytime economic actor is willing to go above “market value” for a service, product, or property right; they tend perceive as being more valuable.

    This reflection of their preferences tacitly displays that they will be less apt to abuse a right they paid am extraordinary amount to secure.

    Fundamentally, I disapprove of state intervention in the sphere of space exploration. However.
    , a state-hosted auction would be a vastly superior alternative a licensing process, by utilizing market features to qualify participants.

  2. Pingback: Year in Review (2021) | prior probability

  3. Pingback: Why not use auctions to allocate orbits in outer space? | prior probability

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