Re: Burt Rutans plans for a manned mission to Mars

In article <ec19625q7kaci9gg03336k0t11cuduui3e@xxxxxxx>,
Monte Davis <monte.davis@xxxxxxxxxxx> wrote:
Hopefully lower launch will stimulate
demand which will provide for economies of scale which will lower launch
costs even more... You get the picture. Basic economics at work.

The operative word here is "hopefully." As there's no clear example of
cost/demand elasticity in 49 years of space activity, all hopes that
it will kick in Real Soon Now are based on dubious analogies to other
forms of transportation.

You seem to be asserting that spaceflight is inexplicable magic, whose
economic properties can only be guessed at.

Nonsense. It follows the same economic principles as any other human
endeavor, e.g. any other form of transportation. Differences in the
results follow from differences in the situation, not from inapplicability
of the basic methods. The spaceflight situation *is* different, but that
doesn't make the results incalculable, just different.

There *are* ways of looking at this which go deeper than analogies and
handwaving; you can, for example, study both actual and potential markets
and project how they would be affected by lower cost. It's still somewhat
iffy, but it's a lot more solid than reasoning by analogy.

The best studies done to date, notably the CSTS work, say that reducing
costs a *little* doesn't really improve things much. Demand grows only
slightly, and so profit *drops*, until you get down below about $250/kg.

The crucial threshold is reached when a substantial payload can go up and
come back for a few hundred thousand (reliably and safely, on a couple of
months' notice), because that makes it practical for a company to explore
a speculative market. Even at $250/kg, the reasonably-assured markets are
not big enough; the big return is going to come from the success of a few
of the more speculative markets. There are enough of them that it's
virtually certain that some of them will succeed... but we can't tell
which ones. So costs have to go low enough that people will experiment.
--
spsystems.net is temporarily off the air; | Henry Spencer
mail to henry at zoo.utoronto.ca instead. | henry@xxxxxxxxxxxxx
.

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