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<p>We propose a simple two-stages duopoly game where two firms produce a homogeneous good to satisfy the demand in a foreign market. First they decide whether to serve this market with exports or with foreign direct investments and then they play a one-shot Cournot-Nash game. This game has been made even more complex by the fact that foreign direct investments induce technological spillovers which imply the possible entry of a third firm. From the complete characterization of the equilibria we show that a small disadvantage of one of the original firms can induce this firm to invest alone in the foreign country rather than export. In this case, the foreign investment is motivated by the fact that the cost that is associated with the early arrival of a third competitor - through technology spillovers - is borne by the two firms that are already present in the market, while the gain - an increase in market share in the duopoly - is captured by the firm that invest abroad. We have in mind the competition between Airbus and Boeing in China.</p>

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Collective Loss and Private Gain: Deciphering Boeing and Airbus’ Opposing Flight Plans in China

  • 期刊论文

  • 发表日期：

    2025年9月20日

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  • Patrice Cassagnard,
  • Pierre Regibeau,
  • Mamadou Thiam

摘要

We propose a simple two-stages duopoly game where two firms produce a homogeneous good to satisfy the demand in a foreign market. First they decide whether to serve this market with exports or with foreign direct investments and then they play a one-shot Cournot-Nash game. This game has been made even more complex by the fact that foreign direct investments induce technological spillovers which imply the possible entry of a third firm. From the complete characterization of the equilibria we show that a small disadvantage of one of the original firms can induce this firm to invest alone in the foreign country rather than export. In this case, the foreign investment is motivated by the fact that the cost that is associated with the early arrival of a third competitor - through technology spillovers - is borne by the two firms that are already present in the market, while the gain - an increase in market share in the duopoly - is captured by the firm that invest abroad. We have in mind the competition between Airbus and Boeing in China.