Abstract
The commercial aircraft industry, if left to its own, would naturally tend toward monopoly and technological lethargy. However, throughout the 20th century the military energized the commercial industry by injecting critical technologies and providing competitors from the military industry. As a result, product evolution has been rapid and business failures prolific. In the last 20 years the technological interests of the military and civilian sectors have diverged. The result, which is only now beginning to be felt, is a single American commercial airframer with little incentive to take technological risks in product development. This paper develops the economic theory of the interaction of the commercial and military sectors, summarizes the economic history of the U.S. commercial aircraft industry in the 20th century, and draws examples from history to illustrate the theory.
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