Sport Pilot Talk

N918KT

I'm taking a microeconomics course in my community college right now and in class we were talking about the different types of market structure. I know that the aircraft manufacturing industry is under oligopoly but in my opinion, it only tends to be true for the big commercial airplane manufacturers such as Boeing and Airbus.

However, I believe that the LSA manufacturing industry is under monopolistic competition since there are 100+ manufacturers. Is this true you think guys?

Jack Tyler · Posted: Sun May 01, 2011 12:04 pm Post subject:

Kevin, if we're working off the same basic definition, I'd say mostly 'yes' for the LSA industry. (The exception might be just how differentiated the products are, given they are all built to the same standards with mostly Rotax engines, tho' in other respects individual products can be sub-grouped by fuselage or wing materials, high or low wing, etc.)

For others, Roane State CC (TN) offers this definition:
Monopolistic competition is a market structure in which:
-there are many competing producers in an industry,
-each producer sells a differentiated product, and
-there is free entry into and exit from the industry in the long run
-because there are many firms (each small compared to the market)
- collusion is difficult (due to the large number of sellers)
- actions of any one firm will be ignored by other firms (each firm is too small for its actions to be relevant to others)

Personally, I think this classification is far less relevant to or predicative of the future of Sport Aviation and the LSA industry than looking at where the industry relative to its location in the typical life cycle of a business or industry.