In our Managerial Economics textbook, we consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm (see Figure 15-1). There are several possibilities of how this sequential game will be played. We want to use the Froeb rule of “look ahead and reason back.”
Post a Response
For your discussion post, use Figure 15-1 from the textbook as your starting point to address the following:
- Play and analyze the game. Can, and how does, the entrant succeed? Is the incumbent ever in control of this game? What is the Nash equilibrium?
- You may wish to review the old game known as Duopoly, as well as Antoine-Augustin Cournot, to help inform your post.