Airbus vs Boeing - Members of Airbus (CASA, Aerospatial)...

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Members of Airbus (CASA, Aerospatial) are Govt entities. Hence covert or tacit collusions are not possible due to anti trust threats Predictions regarding the no of super jumbos required differ for each player. Hence they may not collude. Boeing has finances (being the market leader) and Airbus is known for its technology. But technology can be effectively implemented only if there are proper finances and this could be achieved only through a collusion. Hence Airbus has more incentive to collude. Pay-off Matrix for Airbus and Boeing: Airbus NC C +,- +,+ +,-- ++,++ 3 The dominant strategy for both the players here is to collude. Since both the players have no further incentive to change their strategies, given the other one wants to collude, the condition of both colluding (C-C) depicts Nash Equilibrium. (+) - Profit (-)- Loss NC, NC – Boeing has low costs and hence higher profit margins because Boeing estimates fewer planes (200-300) for the next 20 years. Since Boeing is already a market
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Airbus vs Boeing - Members of Airbus (CASA, Aerospatial)...

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