Question: Industrial Organization: Entry and Sequential Equilibrium 3 Entry and Sequential Equilibrium Consider a market where demand is given by P = 100 - Q. Firms

Industrial Organization: Entry and Sequential Equilibrium

3 Entry and Sequential Equilibrium Consider a market where demand is given by P = 100 - Q. Firms in this market are identical and produce at constant marginal cost MC = 20. Let F = 200 be the fixed cost of entry that each firm has to pay. Firms simultaneously choose whether to enter or not, and then pick quantities once they know how many competitors they have. How many firms enter the market in equilibrium

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