Company A is considering whether to invest in infrastructure that will allow it to expand into a

Question:

Company A is considering whether to invest in infrastructure that will allow it to expand into a new market. Company B is considering whether to enter the market. Assume the companies know each other€™s payoffs. Using Figure 9P-6, choose the outcome that will occur from the list below.

a. A invest, B enter.

b. A invest, B don€™t enter.

c. A don€™t invest, B enter.

d. A don€™t invest, B don€™t enter.

Figure 9P-6:

Result Enter B: 2 A: 2 Company B Invest B:0 A: 4 Don't enter Company A Enter B: 1 A: 1 Company B Don't invest B: 0 A: 2