Focusing on the decision-making confusion of aerospace components manufacturers in market entry order and product development strategy, a market entry game theory model based on the conversion cost and learning curve effects, as well as a product differentiation with downward compatibility game theory model is established. Game analysis shows there is a significant first-mover advantage in the aerospace components market, while adopting a downward compatible strategy may provide a second-mover advantage. The study has two implications. First, companies must strive to be the first mover into the market; second, the incomers should adopt a downward compatible product differentiation strategy.

Pricing is important when considering the difficulty of localizing core components. Localization encompasses three essential implicit conditions, under which a two-stage alternative game model reveals the formation of prices of domestic core components: the contraction in price at the beginning of localization is negatively correlated to the cost of domestic core components. Further analysis shows that sellers of domestic core components may use the strategy of second-degree price discrimination to alleviate the contradiction between cost and price reduction. It is also possible to adopt the price skimming method or the experience pricing method based on the order of entering the market.