TY  - JOUR
AU  - Irwin,Douglas A.
AU  - Pavcnik,Nina
TI  - Airbus versus Boeing Revisited: International Competition in the Aircraft Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8648
PY  - 2001
Y2  - December 2001
UR  - http://www.nber.org/papers/w8648
L1  - http://www.nber.org/papers/w8648.pdf
N1  - Author contact info:
Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH  03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu

Nina Pavcnik
Department of Economics
6106 Rockefeller Center
Dartmouth College
Hanover, NH  03755
Tel: 603/646-2537
Fax: 603/646-2122
E-Mail: nina.pavcnik@dartmouth.edu
AB  - This paper examines international competition in the commercial aircraft industry. We estimate a discrete choice, differentiated products demand system for wide-body aircraft and examine the Airbus-Boeing rivalry under various assumptions on firm conduct. We then use this structure to evaluate two trade disputes between the United States and European Union. Our results suggest that the aircraft prices increased by about 3 percent after the 1992 U.S. -- E.U. agreement on trade in civil aircraft that limits subsidies. This price hike is consistent with a 7.5 percent increase in firms' marginal costs after the subsidy cuts. We also simulate the impact of the future entry of the Airbus A-380 super-jumbo aircraft on the demand for other wide-bodied aircraft, notably the Boeing 747. We find that the A-380 could reduce the market share of the 747 by up to 14 percent in the long range wide-body market segment (depending upon the discounts offered on the A-380), but would reduce the market for Airbus's existing wide-bodies by an even greater margin.
ER  -