Duopolist Response to Potential Competition

Airbus and Boeing are currently excellent examples of a duopoly in the production of single aisle passenger jets, with the workhorse models being the A320 and the 737 respectively. The Economist reported that Airbus and Boeing's customers (airline firms) are interested in greater fuel economy from these planes. Given the increase in competition from Bombardier and Embraer and potential competitors in Russia and China, The Economist reports that the incumbent duopolists are responding by making improvements in the jet engines to meet the demand of their customers and to try to hold off the encroachment of potential competitors.