Question: Consider the sequential-move game depicted in Figure 1. The game describes Apple's decision to develop the new iPhone with a radically new software which allows

Consider the sequential-move game depicted in Figure 1. The game describes Apple's decision to develop the new iPhone with a radically new software which allows for faster applications (apps). These apps are, however, still not developed by app developers. If Apple does not develop the new iPhone, then all companies make zero profit in this emerging market, If, instead, the new iPhone is developed, then company 1 (the leader in the app industry) gets to decide whether to develop apps that are compatible with the new iPhone's software. Upon observing company 1's decision, the followers (Firm 2 and 3) simultaneously decide whether to develop apps (D) or not develop (ND). Find all SPNE in this sequential-move game.

Do not develop new iphone Apple Apple Firm 1 Firm 2 Develop new iPhone Firm 3 Firm 1 (Leader) Develop Do not develop Firm 2 Firm 2 D DND D DND Firm 3 Firm 3 D DND D DND D DND D DND oood NOOK NNOO ONOL ONNO NONO

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