In Space, No One Can See Your HHI
Two rocket companies walk into an antitrust review. They leave as a de facto monopoly. And somehow, the punchline may be that this was good for consumers, taxpayers, and maybe even competition.
A little context. In 2006, Boeing and Lockheed Martin combined their launch divisions into a joint venture called United Launch Alliance (ULA). That’s what I mean when I say they “combined.” It wasn’t technically a merger, and the distinction matters once you get deep into antitrust doctrine. For simplicity, though, think of it as a merger to monopoly. That sounds especially bad in an industry responsible for launching national-security payloads.
By every static measure, this is the textbook nightmare.
Readers know I think textbook metrics are often a bad starting point. So I was intrigued by a recent paper from Ruibing Su, Chenyu Yang, and Andrew Sweeting arguing that the deal was probably a good idea after all.
Their key insight—missing from the standard model—is that every launch teaches engineers something. The team flying its 50th mission knows things the team flying its first mission does not. Before the “merger,” that knowledge accumulation was duplicated across two separate programs, with separate engineering teams, supply chains, and production systems. That creates a clear possibility for efficiencies in a very specific sense—not just cost cutting, but faster learning.
The question is whether those efficiencies were large enough to outweigh the standard monopoly problem.
Su, Yang, and Sweeting argue yes. Using a structural model packed with all the usual modern industrial-organization bells and whistles, they analyze the space-launch industry from 1985 to 2024. Their conclusion: the learning synergies were real and large enough to offset the harms from increased market power.
They also find that when the government committed to multiyear block buys—instead of shopping for launches one mission at a time—costs fell dramatically. Forward-looking procurement gave the supplier stronger incentives to invest in improving future performance, even without a direct competitor applying pressure.
That’s a serious empirical result for one industry. The harder question is what regulators were supposed to do with that possibility at the time.