Earning its Wings: a political economy analysis of China's journey toward development of the C-919 commercial airliner

This article examines China's development of its C-919 large passenger aircraft through the lens of Porter's Determinant Model. The model serves as a blueprint for analyzing what China must do to increase its probability of developing a competitive, large passenger aircraft. Success in the industry can be achieved best by developing technologically advanced aircraft and selling a sufficient number to develop economies of scale. To explore underlying questions of what China is doing right and what areas need improvement, the author interviewed key aviation professionals and sampled the limited publications on the topic in both English and Chinese.     

Foreclosure in contests

We consider a contest where one firm has a cost advantage over rivals. Instead of taking the set of rivals as given, the favorite can transfer the source of its advantage wholly or partially to a subset of rival firms. Foreclosure of those firms that do not receive the cost reduction may result. We present conditions under which this transfer will occur and consider the welfare properties of exclusion. The expected payoff of the dominant firm is independent of the size of the cost reduction transferred to rivals. Applications include lobbying, patent races and access to essential infrastructure.