Two firms (A, B) consider entering two markets (C, D). Each firm can serve only one market. If both firms enter market D, then the individual profit amounts to 4 (all payoffs are measured in billion Euros). If they both enter market C, then each firm would earn 2. If one firm enters D alone, it earns 10, whereas the firm operating in C earns 6.

 

a. In the mixed strategy equilibrium, each firm chooses to enter market D with probability 4/5.

b. In the mixed strategy equilibrium of the game, the two firms meet in market C with a probability of 2/25.

c. In the mixed strategy equilibrium, each firm chooses to enter market D with probability 4/7.

d. None of the other statements is true.

e. The game has no Nash equilibrium in mixed strategies.

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The detailed answer for the above question is provided below solutions The answer is e The game has ... View the full answer