Economic and Social Aspects of the Space Sector Development Based on the Modified Structure–Conduct–Performance Framework

Background: The global space economy has grown remarkably, witnessing a 10-fold increase in active satellites during the last 15 years. This growth was accompanied by both the increase in geopolitical tensions feeding huge investments (the New Space Race), on the one hand, and the transformation, shifting from a domain historically dominated by government-led programs to one partially energized by commercial players and innovative business models (“New Space”), on the other hand. Objective: To assess the space economy’s current state and future prospects by considering its economic and social dimensions. Methods: Over 120 scholarly articles and “grey” literature positions (e.g., industry reports) were reviewed. The review was structured by a modified Structure–Conduct–Performance framework originally developed by industrial organization (IO) scholars. Findings: Outer space creates extremely harsh conditions for placing and operating objects in orbits, which results in high launching costs, steep reliability standards, capital intensity, and risks that are unmatched in most terrestrial industries. One of the main motivations to venture into this harsh domain was, and still is, the desire to dominate or the fear of being subjugated by others. This “original sin”, born of geopolitical rivalries, continues to cast a shadow over the space economy, channeling the majority of public space budgets into military-related programs. Moreover, many space technologies have a dual-use feature. Not surprisingly, governments are still the major source of demand, dominating midstream in the space value chain. This triad—harsh physics, great power rivalry, and a state-centric midstream—produces a specificity of the sector. In the recent two decades, new entrants (called “New Space”) have begun altering market structure, resulting in new conduct patterns focused on pursuits towards serial production, reusability, and lowering costs. Performance outcomes are mixed. While some efficiency gains are unprecedented, some doubts about market power and negative externalities arise. The assessment of the space economy’s performance is a challenge, as such, due to the blurred boundary between political objectives (supplying public goods, mitigating negative externalities) and economic optimization. Such trade-offs are becoming even more complicated considering the potential conflict between national and global perspectives. The paper offers a preliminary, descriptive study of the space economy through the lens of the modified S-C-P framework, laying basic foundations for the future, possibly more rigorous research of the increasingly important space economy.