Market mechanism - a designed (rather than spontaneously emerging) market.
Market mechanisms are often engineered with policy goals in mind. Among the most well-known (and controversial) of these is the Kyoto Protocol's Clean Development Mechanism for issuing and trading GHG emissions permits.
Project Persephone studies market mechanisms for how they might substitute for (and even improve upon) bureaucratic governance. Market mechanisms might be designed for both exovivaria and the organization itself. The mechanisms might be tested in virtual exovivaria and terrestrial prototypes of exovivaria. Some mechanisms might apply to communities in equatorial alpine regions that have been selected as Project Persephone aid beneficiaries, where the local culture is open to such experiments.
Here are some market mechanisms under consideration:
- Prediction markets for planning. These might include markets for
- Georgist taxation for equitable funding of most non-market governance. A tax only on the value of exovivarium interior spaces minus the value of their improvements helps foster an unhindered market for improvements. The value of property minus its improvements could be determined by a free market for internal space combined with competition in a market for (mandated) insurance on all improvements. Exovivaria could, after all, be damaged or lost through orbital debris impacts, internal conflagrations3 and other catastrophic events. Different surfaces and volumes within exovivaria might have varying market values, even prior to improvements. 4
- Emissions trading markets for ecosystem protection and management. Exovivaria will require keeping ecosystems alive with a very high ratio of "technosphere" mass to natural resource mass compared to the Earth's surface. User preferences for biomass will also tend toward a higher-than-natural fauna-to-flora ratio, since animals are more interesting to watch and interact with than plants. These two factors will greatly increase the need to balance emissions with consumption. In a habitat rotated for artificial gravity, even the movement of animals and user telebots, and the flow of water, could be classified as "emissions"; such movement, if ill-timed, could interfere with the effort of keeping the exovivarium's solar collector pointed toward the sun; however, if well-timed, they could be used to maintain the exovivarium's orientation.5
- Resource exchanges for physical design of exovivaria.6 These could certainly be applied to virtual exovivaria and terrestrial prototypes; they might also apply to various picosatellite proof-of-concept experiments. Given the complexities and constraints of exovivaria, resource exchanges might even prove valuable to users in their property improvements within exovivaria.
- Coupon socialism7 to democratize incentives for project success. Project Persephone will adopt localities in equatorial alpine regions selected as candidate projectile space launch sites; it may emphasize employing local populations to build terrestrial prototypes of exovivaria and as telebot operators. Assigning potentially dividend-paying coupons to citizens in such areas enfranchises them in the success of the Project, including the success of enterprises affiliated with it -- especially enterprises that might employ them.
- Bancor-style international trading units.8 The purpose would be to immunize funding of aid projects against exchange-rate fluctuations, and to help to ensure that trade among Project members flows toward selected equatorial alpine regions. When the Project as a whole is suffering coordination failures or internal political deadlock, a liquidity channel to its aid-beneficiary regions would at least help keep benefits flowing; individual donors could still buy goods and services from individual aid beneficiaries.
- Forward markets for prevention of asset bubbles.9 If the high costs of exovivarium launch can be met with promises to deliver on-orbit "real estate" to sufficiently charitable donors, there would still be the risk that those donors would fall prey to "irrational exuberance" in trading that not-yet-real estate among themselves. Such a market failure could prematurely signal that exovivarium launch had become economically feasible. It would be better for all concerned to get the timing right.10
1 Because pure futarchy as originally described by Robin Hanson might fall afoul of disagreements over its democratic legitimacy, small-sample processes such as deliberative polling might be iteratively applied after "circuit breaker" petitions suspend what would otherwise have been automatic resource allocations; see governance for Project Persephone. ⇑
2 More research into "thin markets" might be required to make prediction markets workable in the Project Persephone context, since design of exovivaria will often require rare specialist expertise. See e.g., Michael Abramowicz, "The Hidden Beauty of the Quadratic Market Scoring Rule: A Uniform Liquidity Market Maker, with Variations" (PDF) and "Inducing Liquidity In Thin Financial Markets Through Combined-Value Trading Mechanisms," John Ledyard, Peter Bossaertsa, Leslie Finec. European Economic Review 46 (2002) 1671-1695 ⇑
3 Not exactly unknown, in spacecraft. The Apollo 1 capsule interior was destroyed by a fire made more intense by a pure oxygen atmosphere, taking the lives of three astronauts. There was a fire aboard the Mir space station, possibly 14 minutes long, caused by the malfunction of a chemical oxygen generator. ⇑
4 Although Georgism is historically associated with progressive social reform, a tax on the unimproved value of land was also deemed by the more-Libertarian Milton Friedman to be "the least bad tax" (Mark Blaug. Economica, New Series, 47, no. 188  p. 472). ⇑
5 Users might be able to earn and sell "motion permissions", not just be required to buy them. For one investigation into spacecraft attitude control using movement of internal masses see "Internal Mass Motion for Spacecraft Dynamics and Control: Final Report", Christopher D. Hall, Virginia Tech, 01-05-2008 ⇑
6 See e.g. the discussion of the Cassini Resource Exchange in "The Experimental Economist", Reason magazine, October 2002; "A Market-Based Mechanism for Allocating Space Shuttle Secondary Payload Priority," (PDF), John Ledyard, David Porter, Randii Wessen, in Experimental Economics 2(3) 173-195 DOI: 10.BF 01669195?; see also the post-Cassini work of Randii Wessen on resource exchanges for robotic spacecraft design. ⇑
8 See "How Keynes' Bancor International Trade Currency Would Work", Prosperity UK, 2003 ⇑
10 NewSpace development has fallen prey to bubbles in the past, although there was no open-market "real estate" being staked out; the orbital assets of Iridium and other late-90s satellite phone companies eventually sold for pennies on the dollar. ⇑