N°26-71: The Price of Position: Spatial Equilibrium in the Geostationary Arc

How costly is uniform congestion pricing when locations differ in value? I study geostationary orbit, where satellites serve different markets from recorded positions and supported $77 billion in satellite television revenues in 2023. I estimate a spatial model of commercial entry in which efficient charges rise with demand. In the baseline estimates, the optimal uniform charge captures 66 percent of the attainable welfare gain, or 79 percent when income replaces population as the demand measure. It reduces congestion but ends entry at positions accounting for less than a tenth of modeled efficient surplus. Longitude-specific charges recover the rest while preserving entry at marginal positions. Most additional gains arise at positions the uniform charge keeps active. Correcting underpricing at high-demand positions contributes the largest share. Substantial spatial heterogeneity can therefore coexist with large gains from a common price, whose cost depends on the surplus exposed to its pricing errors.