Question: D. (10, 10) 10. Consider the following entry game: Here, hospital B is an existing hospital in the market, and hospital A is a potential


D. (10, 10) 10. Consider the following entry game: Here, hospital B is an existing hospital in the market, and hospital A is a potential entrant. Hospital A must decide whether to enter the market (play "enter") or stay out of the market (play "not enter"). If hospital A decides to enter the market, hospital B must decide whether to engage in a price war (play "hard"), or not (play "soft"). By playing "hard," hospital B ensures that hospital A makes a loss of $1 million, but hospital B only makes $1 million in profits. On the other hand, if hospital B plays "soft,", the new entrant takes half of the market, and each hospital earns profits of $5 million. If hospital A stays out, it earns zero while hospital B earns $10 million. Which of the following are Nash equilibrium strategies? A. (enter, hard) and (not enter, hard) B. (enter, soft) and (not enter, soft) C. (not enter, hard) and (enter, soft) D (enter, hard) and (not enter, soft)
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