Counting stars and costs: An empirical examination of space launch cost trend at NASA

Abstract

A cornerstone of the United States space policy is fostering a robust commercial space industry to leverage the benefits of competitive market forces. Space sector stakeholders generally applaud the implementation of this policy decision in the launch industry, citing significant decreases in space launch costs in the last decade. The effectiveness of this policy can be examined through two lenses: the initial cost reduction from the transition of the domain to the private sector and the continuous cost reduction due to the forces of competitive market until reaching an equilibrium. Empirical studies have verified the first effect by comparing commercial launch service costs to those of the Shuttle program. However, the current literature faces data limitations for robust investigations of the second effect. Proprietary factors restrict access to actual launch cost data, necessitating reliance on the prices advertised by the service providers. This study addresses this knowledge gap with an empirical examination using actual launch costs incurred by the National Aeronautics and Space Administration (NASA). The statistical models in this paper reveal NASA's launch cost trends for non-recurring missions using private sector launch services, offering a more precise insight into the current dynamics of the launch market. The study's findings contribute to economic transparency, strengthening the foundation for enhanced market competition. More importantly, the results of the study open the opportunity to reassess the relevant policies to improve the ways government agencies engage with the private sector as the exploration of the unknown expands.