Strategic Responses to Used Goods Markets: Airbus and Boeing

50 Pages Posted: 20 May 2013 Last revised: 4 May 2014

See all articles by Myongjin Kim

Myongjin Kim

University of Oklahoma - Department of Economics

Date Written: October 1, 2013

Abstract

In this paper, I present a dynamic oligopoly model of Airbus, Boeing, and used aircraft markets and employ a unique dataset to examine the interaction between innovation, production, and the used goods markets. My findings show that firms increase the development of new products in response to used goods markets. Moreover, a reduction in government production subsidies has a minor effect on innovation, while a reduction in government R&D subsidies leads to a delay in innovation. Finally, a change in market structure from a duopoly to a monopoly decreases innovation in the presence of used goods markets.

Keywords: Innovation, Used-good Markets, Government Subsidy, Consumer Welfare

JEL Classification: L13, L11, D22, L62, L50, D43, O31

Suggested Citation

Kim, Myongjin, Strategic Responses to Used Goods Markets: Airbus and Boeing (October 1, 2013). Available at SSRN: https://ssrn.com/abstract=2267178 or http://dx.doi.org/10.2139/ssrn.2267178

Myongjin Kim (Contact Author)

University of Oklahoma - Department of Economics ( email )

308 Cate Center Drive
Norman, OK 73019-2103
United States

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