Imagine you are an advisor for a government that is very concerned about competition policies. More concretely, the government you work for is concerned about the airplanes fabrication industry. In this industry there are only two producers, Boeing and Airbus who share the market more or less evenly (Airbus is a little bit bigger, but you can assume that the share of the market is split in two).

1) What can you say about the market in this case? Why do you think there so few firms in this industry?

2) Imagine the firms could operate freely in the market (no antitrust law). What would the firms choose to do? How would the price be in this scenario? How would your answer change if there was an antitrust low? Which outcome is better for society?

3) Recently some Boeing airplanes crashed due to some technical malfunctioning. Imagine that, as a result of this, Boeing went bankrupt and disappeared from the market. What kind of structure has this market now? Is it better or worse for Airbus? Is it better or worse for society?