MULE and Price Curves

--- In ssi_list@yahoogroups.com, "jdr7181" wrote:
--- In ssi_list@yahoogroups.com, "victoriatangoman"
wrote:
> Will MULE development and use lead to cheaper access to space?

Bear in mind that I have never contended (that I can recall) ever
stating outright that MULE development will DIRECTLY "lead to cheaper
access to space."

In a nutshell:

1. The MULE is likely to provide a cheaper means by which space-based
R&D can be conducted.
2. Technological advances that occur through space-based R&D can be a
catalyst to market growth.
3. Success in ANY industry leads to SOME competition.
4. Competition leads to lower costs.

> Let's consider some launch providers. Russians have signed
> agreements with US State Department concerning price parity with US
> launch providers.

Gee, wasn't that nice of them.

> So the main US providers are Boeing and Lockheed/Martin. Their
Delta
> and Atlas rockets are used primarily by US Gov't Agencies.
>
> The question for Boeing and LockMart is if they reduce the cost of
a
> launch by 25%, let's say that that is their profit margin, so now
> they're launching without any profit. The remaining 75% of the
> rocket cost is comprised of 50% fixed cost amortization and 25%
> variable cost.

> By lowering the cost can they expand their market by a factor of 2
> just to make exactly the same level of profit? For it to be worth
> their while the 25% price discount has to generate more than 2
times
> the business.
> Now with the lower price they have less slack with which to weather
> bad times, fund other ventures or R&D, etc.
>
> Will they give up the lucrative government business to take a flyer
> on expanding the commerical sector?
>
> I'm sure they'd be asking themselves what businesses are out there
> that don't currently launch anything into orbit but will initiate
> launch activities if the price is reduced by 25%.
>
> I'm not so sure that a MULE concept is going to lead the aerospace
> companies to lower their launch prices.

The MULE concept alone, no, I agree. But again, the idea behind the
overall concept, not just the MULE, is to provide some incentive for
increased commercial activity in space. I do believe that increasing
activity in space will ultimately result in lower costs for space
access.

Jack