Question: ( Entry Deterrence ) Joe's Gas, the only gas station at a busy highway exit, earns a monopoly profit of $ 1 0 ,
Entry Deterrence Joe's Gas, the only gas station at a busy highway exit, earns a monopoly profit of $ per week. Joe is concerned about entry. He can obtain an exclusive right that would prevent others from entering the market at this location, at a cost of $ mathrm~b per week. If Joe does not buy the exclusive right, a potential entrant must decide whether to enter. If entry occurs, Joe's profit will fall to per week and the entrant will earn mathrmF where F is a weekly fixed cost.
Suppose F and b Calculate the profits earned by the incumbent, Joe, in the sequential Nash equilibrium. Enter your answer with one digit after the decimal.
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