Firm B is the incumbent facing potential entry from Firm A. Refer to the following extensive form game:

Find the subgame perfect Nash equilibrium to this game, if one exists. Firm A plays {Stay Out}; Firm B plays {Hard if Entry}. Firm A plays {Entry}; Firm B plays {Hard if Entry}. Firm A plays {Entry}; Firm B plays {Soft if Entry}. There is no sub game Nash equilibrium to this game.

Transcribed Image Text:

Entry A Stay Out Soft Hard (0, 200) (100, 100) (-10, 50) Entry A Stay Out Soft Hard (0, 200) (100, 100) (-10, 50)

Answer rating: 100% (QA)

Following is the analysis of the subgame perfect Nash equilibrium to th... View the full answer