1European Industrial Policy: The Airbus Case

the DTI and the Controller of HMSO. We are grateful to the Air Division of DTI, and especially to Michael Hodson and Robert Waters, for their detailed help and advice; to John Sutton for comments on the report of the original study; to David Begg and Gene Grossman for comments on the first draft of this paper; to Lars-Hendrik Roeller for comments and advice throughout the project; and to Lisa Anderson for outstanding research assistance. The usual disclaimer applies with particular force: the views reported in the paper are those of the authors alone, and not those of any of the above individuals or institutions. 2Abstract This paper estimates the impact that Airbus’s presence has had on the market for large commercial airliners. Our model reproduces (in a multi-stage) game a stylised characterisation of six main stages in the development of the large commercial airliner market, allowing for three players (Boeing, Airbus and McDonnell Douglas) and four market segments. The model is then used to ask a number of counterfactual questions about what would have happened in a variety of circumstances (notably ones in which Airbus did not enter the market). Besides capacity and product developments, we also model the level of expenditures on research a