Your firm must decide whether or not to introduce a new product. If you introduce the new product, your rival will have to decide whether or not to clone the new product. If you don’t introduce the new product, you and your rival will earn $1 million each. If you introduce the new product and your rival clones it, you will lose $5million and your rival will gain $20 million. If you introduce the new product and your rival does not clone, you will make $100 million and you rival will make $0

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Should you introduce the new product

How would your answer change if your rival has “promised” not to clone your product

What would you do if patent law prevented your rival from cloning your product

Answer rating: 100% (QA)

a b We use the backward induction method to solve this problem Therefore the rival gets to choose wh... View the full answer