Boeing's market structure is a duopoly. This is a market structure in which there are two equally dominant firms that produce or sell the same product ("Competition in Markets," n.d.). A duopoly is a specific type of oligopoly in which a small number of sellers-oligopolists-dominate a particular market or industry (BlurtIt, 2008). In Boeing's case, the equally dominant firm that it competes with in the global aircraft market is Airbus ("Competition in Markets," n.d.). A duopoly is similar to a monopoly except that two equal firms monopolize the market instead of just one all-encompassing firm (Lotterman, 2005). The difficulty of a duopoly is that when either of the two firms makes a decision, it has to consider how the other competitor is going to react (Lotterman, 2005). In the Boeing-Airbus duopoly, "U.S.-based Boeing and Europe's Airbus are the only producers with any significant market share" (Lotterman, 2005). Each of these firms needs to think "several steps ahead" whenever it is deciding whether or not to spend billions on a new plane, because its profitability will depend upon the other firm's response (Lotterman, 2005).
The effectiveness of the duopoly for Boeing is not impressive. It is something that Boeing has to put up with, not something that provides any competitive advantage. For example, Airbus recently released its A380 jumbo jet, a model that Boeing decided some time ago not to develop its own competing version of (Lotterman, 2007). Boeing is concentrating on its 787 Dreamliner instead and announced big sales of the Dreamliner at the same time that Airbus rolled out its new model (Lotterman, 2007). However, Boeing's 2005 first-quarter earnings were down 14%, as orders for its passenger 747s have declined (Lotterman). Lotterman (2007) points out that a duopoly's customers must think as strategically as the two firms do, because if one of the firms goes out of business, that could harm the <...