Optimal satellite shielding and orbital debris

Orbital debris, or space junk, presents a negative environmental externality and poses significant hazards to human activities in outer space. The increasing number of satellites and spacecraft in orbit, from commercial, military, and scientific ventures, has led to an increase in space pollution with millions of pieces of fragments traveling at high speed. This creates a greater risk of collisions and the destruction of spacecraft. This paper examines the consequences of spacecraft shielding, which affects also the emission of orbital debris. By using shields to protect satellites, the probability of destruction in the event of a collision is reduced, along with the creation of additional debris. This serves as an example of how spacefaring operators can take steps to address the negative impact of space pollution within a decentralized system resulted from a profit maximization strategy. Our analysis demonstrates that when individual agents take steps to minimize the risk of collisions and satellite destruction this is equivalent to the internalization of the externality, with a positive impact on the space environment. Nevertheless, we find that the optimal shielding rate is lower than that of a centralized economy, indicating that the negative externality is not fully internalized in the decentralized economy.