What do society’s gains from optimal orbit use look like? — The color scale measures difference in value between a fleet of satellites controlled by a benevolent social planner and a fleet of satellites controlled by open-access firms. Regulation or cooperation would increase the society’s value from from the fleet. Regulation or cooperation would cease to be beneficial when satellites face such a high risk of catastrophic collisions that even open-access firms would not want to launch – the best thing to do at that point is to stop launching, so there are no further gains from switching to the optimal policy. The gains are most pronounced when there are relatively few objects in orbit, particularly satellites. Open-access firms will stop launching when the risk of catastrophic collision is equal to the rate of excess return on a marginal satellite.
What is the difference between the optimal launch policy and open access? A social planner would launch fewer satellites per period, and would stop launching sooner in response to accumulating satellites and debris, than open access. The difference between the two value functions is maximized when the social planner would stop launching but open-access firms would continue to launch.