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Analyzing market competition between Airbus and Boeing using a duo hierarchical graph model for conflict resolution

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Abstract

A duo hierarchical graph model for conflict resolution is developed to investigate market competition between Airbus and Boeing over aircraft sales in the Asia Pacific region. The duo hierarchical graph model, a significant extension of the graph model for conflict resolution methodology, contains two common decision makers, who take part in two related subconflicts, as well as local decision makers, who participate in only one subconflict. New stability definitions are proposed to describe forms of sanction unique to the hierarchical model. The interrelationships between stabilities in the overall graph model and in the two local models are investigated. Then the duo hierarchical graph model is applied to the competition between Airbus and Boeing in both the wide and narrow body markets in the Asia-Pacific region. The two types of Asian airlines have different operating strategies, so that the two markets constitute sub-competitions that can be modelled naturally using the duo hierarchical graph model. The stability results indicate a resolution for all decision makers that implies marketing strategies for the aircraft manufacturers and guidelines for aircraft purchase by the airlines. Thus, this model provides decision makers with a comprehensive understanding of the dynamics of the competition and guidance in identifying beneficial actions.

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Acknowledgments

This research was supported by research grants from the National Natural Science Foundation of China (71601096), Natural Science Junior Scholar Foundation of Jiangsu, China (BK20160809), as well as the National Sciences and Engineering Research Council (NSERC) of Canada. The authors would like to thank the anonymous referees for helping improve the quality this paper.

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Authors and Affiliations

  1. College of Economics & Management, Nanjing University of Aeronautics and Astronautics, Nanjing, 211106, China

    Shawei He

  2. Department of Systems Design Engineering, University of Waterloo, Waterloo, Ontario, Canada, N2L 3G1

    Keith W. Hipel & D. Marc Kilgour

  3. Centre for International Governance Innovation, Waterloo, Ontario, Canada, N2L 6C2

    Keith W. Hipel

  4. Balsillie School of International Affairs, Waterloo, Ontario, Canada, N2L 6C2

    Keith W. Hipel

  5. Department of Mathematics, Wilfrid Laurier University, Waterloo, Ontario, Canada, N2L 3C5

    D. Marc Kilgour

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  1. Shawei He
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Correspondence to Keith W. Hipel.

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Shawei He is an assistant professor of management sciences at Nanjing University of Aeronautics and Astronautics (NUAA), Member of Technical Committee of Conflict Resolution Section in IEEE Systems, Man, and Cybernetics. Dr. He received his BA in industrial engineering (2008), MASc in systems engineering (2011), and the PhD in systems design engineering (2015) from the University of Waterloo. His research interests include the modelling of societal and environmental conflicts, group decision making, and industrial engineering.

Keith W. Hipel is a university professor of systems design engineering at the University of Waterloo, Past President of the Academy of Science (Royal Society of Canada (RSC)), Senior Fellow at the Centre for International Governance Innovation, and Fellow of the Balsillie School of International Affairs. Dr. Hipel received his BASc in civil engineering (1970), MASc in systems design (1972), and the PhD in civil engineering (1975) from Waterloo. His interdisciplinary research interests are the development and application of conflict resolution, multiple objective decision making and time series analysis techniques. Dr. Hipel is Foreign Member of the United States National Academy of Engineering (NAE) and holds Fellow designations with IEEE, RSC and five other professional organizations. He is recipient of the JSPS Eminent Scientist Award (Japan), Sir John William Dawson Medal (RSC), Norbert Wiener Award (IEEE), Jiangsu Friendship Medal, and three honorary doctorate degrees.

D. Marc Kilgour is professor of mathematics at Wilfrid Laurier University, Waterloo, Ontario, Canada and adjunct professor of systems design engineering at the University of Waterloo. He holds BASc, MSc, and PhD degrees in engineering physics, applied mathematics, and mathematics from the University of Toronto. His publications can be broadly described as the mathematical analysis of decision problems. More specifically, he has contributed innovative applications of game theory and related techniques to international relations, arms control, environmental management, negotiation, arbitration, voting, fair division, and coalition formation, and has pioneered the application of decision support systems to strategic conflict. Active in 12 professional societies, he has held many editorial responsibilities including co-editing the Springer Handbook of Group Decision and Negotiation. He was President of the Peace Science Society in 2012-2013, and President of the INFORMS Section on Group Decision and Negotiation in 2015-2017.

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He, S., Hipel, K.W. & Kilgour, D.M. Analyzing market competition between Airbus and Boeing using a duo hierarchical graph model for conflict resolution. J. Syst. Sci. Syst. Eng. 26, 683–710 (2017). https://doi.org/10.1007/s11518-017-5351-7

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