Consider two competitors, Cola and Pela, who play an enter deterrence game. Cola is the incumbent firm, and Pela is a potential entrant. Cola can choose either Fight or Don't Fight, and Pela can choose either Enter or Stay Out. The payoff matrix is as follows, where the first number within the parenthesesis the payoff for Pela and the second number within the parentheses is the payoff for Cola.

		Incumbent (Cola)
		Fight	Don't Fight
Entrant (Pela)	Enter	(-2,0)	(2,1)
	Stay Out	(0,6)	(0,8)

A. If Cola and Pela play the game simutanously, Is there a dominant strategy equilibrium in this problem? If so, what is it?

B. If Cola and Pela play the game sequentially and Pela makes the first move, can Cola successfully deter the entry by Pela? Explain

C. identify two (2) strategies Cola can use to deter the entry of Pela.

Answer rating: 100% (QA)

A There is a dominant strategy equilibrium in this problem Col a s dominant strategy is to Fight ... View the full answer