Final answer:
The key assumption of the Brander-Spencer Airbus & Boeing example is not that a subsidy enables both firms to operate profitably. The example of Boeing and Airbus focuses on the concept of an oligopoly, which is a market structure where a few large firms dominate the industry.
Step-by-step explanation:
The key assumption of the Brander-Spencer Airbus & Boeing example is not that a subsidy enables both firms to operate profitably.
The example of Boeing and Airbus focuses on the concept of an oligopoly, which is a market structure where a few large firms dominate the industry. The barrier to entry in this industry is created by a combination of economies of scale and market demand, which limits competition from smaller firms.
The assumption is that there are only a few firms in the market, and the larger firms have higher market power due to their economies of scale and existing customer base.