caa a22 4500 39751705X CHVBK 20180308164621.0 cr unu---uuuuu 161202e19951001xx s 000 0 eng 10.2307/1344592 doi (NATIONALLICENCE)oxford-10.2307/1344592 European industrial policy: the Airbus case [Elektronische Daten] [Damien Neven, Paul Seabright] European industrial policy The Airbus case We estimate the impact of Airbus on the market for large commercial airliners, modelling a multistage game of the development of this market with three players: Boeing, Airbus and McDonnell-Douglas (MDD). What would have happened had Airbus not entered the market? We find that, given the prior presence of MDD, entry by Airbus reduces airliner prices by only 3.5% on average. The Airbus presence constrains actions by Boeing, but weakens the incentive for MDD to compete with Boeing; and, by reducing Boeing's market share, it reduces Boeing's economies of scale and scope, thus raising costs. Hence, the consumer surplus argument for government subsidy to Airbus is only weakly supported by our analysis: the beneficial challenge to Boeing was already being provided by MDD. In product development, we find that, although Airbus may have deterred MDD from producing a medium-range, medium-body aircraft like the A300, it made it easier for MDD to produce the MD11 in competition with the A330/340 and the Boeing 777. The loss of scale and scope economies by Boeing as a result of the Airbus entry substantially raised the cost to Boeing of producing the 777, making competition from MDD easier even with Airbus's presence. Finally, we find that the presence of Airbus reduces the profits of Boeing by over $100 billion, and of MDD by two-thirds. Airbus itself is estimated to make profits of around $50 billion over the five decades from the 1970s, or about a billion dollars a year, a rate of return over the whole period of between 6% and 11%. If we give the same weight to profits and consumer surplus, Airbus has had a large negative impact on world welfare, but a comfortably positive impact on European welfare. — Damien Neven and Paul Seabright © CEPR, CES, MSH, 1995 Original Articles nationallicence Neven Damien University of Lausanne and University of Cambridge aut Seabright Paul University of Lausanne and University of Cambridge aut Economic Policy Oxford University Press 10/21(1995-10-01), 313-358 0266-4658 10:21<313 1995 10 economicpolicy https://doi.org/10.2307/1344592 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.2307/1344592 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Neven Damien University of Lausanne and University of Cambridge aut NATIONALLICENCE 700 1- Seabright Paul University of Lausanne and University of Cambridge aut NATIONALLICENCE 773 0- Economic Policy Oxford University Press 10/21(1995-10-01), 313-358 0266-4658 10:21<313 1995 10 economicpolicy Metadata rights reserved CC BY-NC-4.0 http://creativecommons.org/licenses/by-nc/4.0 nationallicence SWISSBIB 170239853 BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-oxford