Boeing vs. Airbus

In class we took a look at a semi-realistic example of the prisoner's dilemma with Boeing  (BA) and Airbus (EADS). Within the commercial aviation industry BA and EADS are by and large the two most competitive and successful firms. The game theory model was determined by the willingness to compete in the large scale commercial aircraft sub sector of the industry which would account for the production of the Boeing 700 series and the Airbus 380 series. Now for simplicity's sake and in an effort to demonstrate the Nash Equilibrium's, we assumed that the performance of the two firms in production and sales were pretty similar if not equal. By doing so we came up with a prisoner's dilemma very similar to the one below:

Boeing/Airbus	DEVELOP	DON’T DEVELOP
DEVELOP	(-$10, -$10)	($50, $0)
DON’T DEVELOP	($0, $50)	($0, $0)

Since this model is based off of data from 2011 and previous, as of today the commercial aviation industry has changed its preferences. No longer are firms such as BA and EADS focusing on large transcontinental capable aircraft. Instead they are focusing on small regional/domestic aircraft such as the Boeing 737 series and the AirBus 320 series; and with good measure. Both of these lines of aircraft account for approximately 44% and 42% of total company revenue for BA and EADS respectively. Percentage of company revenues in no way is an accurate or sufficient measure in determining industry performance in the mid size aircraft sub sector; however, coincidentally the 2% difference in the percentage of total revenue that these aircraft lines produce for the two firms is a pretty good mirror of the actual performance of BA and EADS against each other in terms of: delivered aircraft, contractual backlog, and future contracts. This is to say that across the board BA holds an approximate 2% advantage over EADS in producing this particular type of aircraft. So as we shift the focus towards this production model versus the large scale aircraft model my question is how would this payout schedule look now with the given information about this sector?

Boeing/Airbus	DEVELOP A320 Series	DON’T DEVELOP A320 Series
DEVELOP 737 Series
DON’T DEVELOP 737 Series

(A closely related Cornell University blog article which inspired this post is available here:Cornell University Blog )