Interactions in the Markets for Narrow and Wide-body Commercial Aircraft

The competitive structure of the market for wide-body commercial passenger aircraft has been extensively explored by the literature because the market features several interesting analytic properties such as learning-by-doing, differentiated products, and active trade policy. This paper extends understanding of both the narrow and wide-body commercial, passenger aircraft markets by investigating the competition between firms that produce only in the narrowbody market, such as the Commercial Aircraft Corporation of China (COMAC), and firms that produce in both the narrow and wide-body markets, such as Boeing. A simple, multimarket oligopoly model in the vein of Bulow et al. (1985) is developed and three different cases are analyzed. Price and delivery data is used to assess the validity of the model and provide some interpretation. Finally, the results of the first part are used to discuss the factors that would affect the entry of COMAC into the wide-body market.