Question: Question 17 1 pts Charles must decide whether to enter or not in the market. He doesn't know if Liza, the incumbent, is efficient or

 Question 17 1 pts Charles must decide whether to enter or

Question 17 1 pts Charles must decide whether to enter or not in the market. He doesn't know if Liza, the incumbent, is efficient or not. If she is efficient, she has zero marginal costs and gains 27 in a monopoly and 8.9 in a duopoly. If she is inefficient, her marginal costs increase to 5 and gains are 14.1 in a monopoly and 9 in a duopoly. Should Charles enter the market, it would gain 40 if Liza is inefficient and lose 1 otherwise. See the table below. Liza's Costs Charles' Action (incumbent) Enter Do Not Enter Low Costs (8.9; -1) (27; 0) High Costs (9: 40) (14.1; 0) The demand function is p = 18 - 3*q. To signal her nature in the first period, Liza should produce O 1 0 3 0 4 0 6

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