The National Aeronautics and Space Administration (NASA) maintains a large array of national-class aeronautics testing capabilities, but there has been an overall downward trend in the use of its wind-tunnel test facilities. Fiscal pressures have increased incentives to cut costs and create additional sources of revenue to sustain and expand the testing capabilities that NASA offers.
The authors explore six potential approaches to pricing the use of these facilities: (1) marginal cost pricing, (2) two-part pricing with full cost recovery, (3) two-part pricing with subsidization, (4) average cost pricing, (5) average cost pricing with subsidization, and (6) no charge. Evaluating each approach against three criteria — efficiency, fiscal impact, and fairness — the authors find that the no-charge policy performs poorly across the board and that no one strategy performs well across all three criteria. However, each of the first five options performs well against at least one criterion.
Table of Contents
An Illustrative Model
Comparing Alternative Methods for Pricing Wind Tunnels