Varyukhina, E. V., & Klochkov, V. V. (2020). Modelling of the Impact of National Standardization on Duopolistic Competition in the Civil Aircraft Market. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 17 (4), 859-873.
The purpose of this study is to analyze standards as one of the main tools of protectionism in global markets of industrial goods. We use standards for modeling of market competition and adapt this approach for civil aviation markets. The role of local noise standards in civil aircraft markets is discussed. Imposition of more stringent aviation noise standards is modelled in the form of a two-person non-zero-sum game. Players are aircraft corporations that conduct research and development to reduce noise and lobby for stricter regulations in their controlled markets. The model can be used to predict that tighter aviation noise standards will be imposed and to justify the strategy of Russian aviation industry and science. The proposed approach can be adapted for other industries with strict regulations (in terms of safety, ecology). Such estimation allows us to assess whether it is in the country’s interests to participate in the standards race or not. It is shown that the equilibrium degree of standards tightening is higher if the players’ market shares are close to equal or individual players have advantages in the cost of production and/or product improvement is highly likely due to the company’s R&D progress.