Modelling strategic alliances in the wide-body long range aircraft market
- Authors: BERRITTELLA M; LA FRANCA L; MANDINA V; ZITO P
- Publication year: 2007
- Type: Articolo in rivista (Articolo in rivista)
- Key words: agreements; aircrafts market; competition; technology barriers
- OA Link: http://hdl.handle.net/10447/3607
Abstract
The wide-body long-range aircrafts market is characterized by increasing rivalry between Airbus and Boeing. One of the factors that drive their strategic behaviour is technological. We propose a technology indicator to identify conditions under which the aircraft companies have incentives to join a coalition. For this, we provide measurement of the side-payments necessary to sign a strategic alliance aimed at reducing technological barriers in the market. The results suggest that the existence of side-payments guarantees the stability of a strategic alliance if the gap in the technological level between the firms is high, or competition is through prices. For monopoly, a strategic alliance is profitable, but never stable.