In your 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, use Figure 15-1 from the textbook as your starting point to address the following:
Can, and how does, the entrant succeed? Is the incumbent ever in control of this game?
You may wish to review the old game known as Duopoly, as well as Antoine-Augustin Cournot, to help inform your post.
Sample Solution
