Collective Loss and Private Gain: Deciphering Boeing and Airbus’ Opposing Flight Plans in China

Perte collective et gain privé: décrypter les plans de vol opposés de Boeing et d'Airbus en Chine

Patrice Cassagnard (), Pierre Regibeau and Mamadou Thiam ()
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Patrice Cassagnard: TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique

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Abstract: We propose a simple two-stages duopoly game where two firms produce a homogeneous good to satisfy the demand in a foreign market. First they decide whether to serve this market with exports or with foreign direct investments and then they play a one-shot Cournot-Nash game. This game has been made even more complex by the fact that foreign direct investments induce technological spillovers which imply the possible entry of a third firm. From the complete characterization of the equilibria we show that a small disadvantage of one of the original firms can induce this firm to invest alone in the foreign country rather than export. In this case, the foreign investment is motivated by the fact that the cost that is associated with the early arrival of a third competitor - through technology spillovers - is borne by the two firms that are already present in the market, while the gain - an increase in market share in the duopoly - is captured by the firm that invest abroad. We have in mind the competition between Airbus and Boeing in China.

Keywords: Airbus; Boeing; Cournot; Entry deterrence; Export; FDI; Spillovers; China (search for similar items in EconPapers)
Date: 2025-09-20
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Published in Review of Industrial Organization, 2025, ⟨10.1007/s11151-025-10031-3⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05411455

DOI: 10.1007/s11151-025-10031-3

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