Exchange-rate misalignments in duopoly: the case of Airbus and Boeing

Arbeitspapier

We examine the effect of exchange-rate misalignments on competition in the market for large commercial aircraft. This market is a duopoly where players compete in dollar-denominated prices while one of them, Airbus, incurs costs mostly in euros. We construct and calibrate a simulation model to investigate how companies adjust their prices to deal with the effects of a temporary misalignment, and how this affects profit margins and volumes. We also explore the effects on the long-run dynamics of competition. We conclude that due to the duopolistic nature of the aircraft market, Airbus will pass only a small part of the exchange-rate fluctuations on to customers through higher prices. Moreover, due to features specific to the aircraft industry, such as customer switching costs and learning-by-doing, even a temporary departure of the exchange rate from its long-run equilibrium level may have permanent effects on the industry.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Kiel Working Paper ; No. 1488

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Foreign Exchange ; Oligopoly and Other Imperfect Markets
• Thema: Exchange rates ; pass-through ; oligopoly ; Luftfahrtindustrie ; Duopol ; Exchange Rate Pass-Through ; Internationaler Wettbewerb ; Theorie ; EU-Staaten ; USA

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Bénassy-Quéré, Agnès ; Fontagné, Lionel ; Raff, Horst
• Ereignis: Veröffentlichung
• (wer): Kiel Institute for the World Economy (IfW)
• (wo): Kiel
• (wann): 2009

Weitere Informationen

• Handle: http://hdl.handle.net/10419/24884
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ