The Political Economy of Subsidizing Space Commerce

Governments currently subsidize research increasing such disruptive capabilities despite the fact that international law makes governments – not firms – liable for damages. We show that this can be explained in a political economy setting where the potential possibility of conflict affects the terms of an agreement outlawing them. In essence, by increasing the conflict capabilities of one’s own firms, this enables a government to push for a more favourable treaty. We demonstrate that under plausible assumptions, this works to the benefit of technologically-advanced nations. Thus, subsidizing current space activities is likely to cement current international income inequality.