Regulation of the new space economy: opportunities and challenges of the new Italian law 89/2025

Driven by rapid technological advancements and evolving market dynamics, the space sector is undergoing a profound transformation, emerging as a commercially reconfigured industry in which private firms play an increasingly central role. Over the past decades, private actors have demonstrated not only their capacity to enter the space market, but also to lead innovation, shape technological trajectories, and redefine competitive structures. These developments call for regulatory adaptation, both to reduce uncertainty for institutions and firms and to enhance the sector’s competitiveness and innovative capacity. In this context, Italy promulgated its new Space Economy Law in June 2025. This paper examines the opportunities and challanges of this legislation. Our study contributes to existing literature providing a documented and critical analysis of the law’s key features, highlighting its potential to support emerging private firms, sustain research activities, strengthen public–private collaboration, and advance a coherent strategic industrial vision. The paper also makes a theoretical contribution to the Sectoral Systems of Innovation (SSI) literature by extending the framework toward an “inter-sectoral systems of innovation” perspective, better suited to capturing innovation dynamics that span multiple technological and industrial domains. Finally, the paper proposes a set of policy recommendations aimed at ensuring the effective, competitive, and sustainable implementation of the new law.