Two companies are deciding at what point to enter a market. The market lasts for four...

 

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Two companies are deciding at what point to enter a market. The market lasts for four periods. The set of strategies available to each company are: (1, 2, 3, 4, do not enter}. Once a company enters the market, it has to stay until the end. For example, if a company enters in period 2, it is in the market for periods 2, 3 and 4. The profit of a firm in any period t that it is in the market is: 10 x t-15 if it is a monopolist and 4 x t- 15 if it is a duopolist. The company earns zero profit for any period that it is not in the market. Note, these are per-period profits and depend on the time period t and whether the firm is a monopolist or a duopolist in that period. A firm's payoff from any strategy is the aggregate profit it earns from the period it enters through period 4. Which of the following is a Nash equilibrium? 1) Both companies enter in period 2. 2) One company enters in period 2, and the other enters in period 3. 3) One company enters in period 3, and the other enters in period 4. 4)Both enter in period 4. 5) None of the above. Two companies are deciding at what point to enter a market. The market lasts for four periods. The set of strategies available to each company are: (1, 2, 3, 4, do not enter}. Once a company enters the market, it has to stay until the end. For example, if a company enters in period 2, it is in the market for periods 2, 3 and 4. The profit of a firm in any period t that it is in the market is: 10 x t-15 if it is a monopolist and 4 x t- 15 if it is a duopolist. The company earns zero profit for any period that it is not in the market. Note, these are per-period profits and depend on the time period t and whether the firm is a monopolist or a duopolist in that period. A firm's payoff from any strategy is the aggregate profit it earns from the period it enters through period 4. Which of the following is a Nash equilibrium? 1) Both companies enter in period 2. 2) One company enters in period 2, and the other enters in period 3. 3) One company enters in period 3, and the other enters in period 4. 4)Both enter in period 4. 5) None of the above.