Shakeout in the early commercial airframe industry

Taylor Jaworski and Andrew Smyth

Economic History Review, 2018, vol. 71, issue 2, 617-638

Abstract: The commercial airframe industry in the US experienced a shakeout from the early 1930s into the post†Second World War period. Unlike shakeouts in automobiles, tyres, or televisions, the commercial airframe industry's early life cycle was affected by external factors, particularly government demand. Using newly digitized data on all planes introduced in the commercial market between 1926 and 1965, we find that commercial airframe manufacturers with bomber contracts during the Second World War were more likely to have postwar market share than firms without such contracts, controlling for plane characteristics and other forms of government contracting. We attribute the effect of bomber contracts to advantages in R&D learning capacity acquired by firms with military airframe contracts. Despite low (or zero) initial presence in the commercial market, these learning capacity advantages allowed such firms to survive the early period of the shakeout, and later to thrive.

Date: 2018
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