sequential-move game

sequential-move game

 

In the text, we considered a sequential-move game in which an entrant was considering an industry in competition with an incumbent firm (figure15-1). Consider now that the entrant, if fought , has the possibility of withdrawing from industry (at a loss of 1for the entrant and a gain of 8 for the incumbent), or staying (at a loss for each player). What is the equilibrium of this game? Discuss if the entrant is better off with or without the ability to withdraw.

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