Consider the following dynamic game with perfect information. Firm E ("Entrant") considers entering a market. The "Entrant" first chooses to stay out of the market or enter the market. If the "Entrant" decided to enter the market, the "Entrant" decides whether to focus on the large market niche or the small market niche. After observing the market focus decision of the "Entrant," the incumbent firm chooses between the large niche and the small niche. The game in an extensive form is given below:

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