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Given the following payoff matrix, (a) indicate the best strategy for each firm. (b) Why is the entry-deterrent threat by firm A to lower the price not credible to firm B? (c) What could firm A do to make its threat credible without building excess capacity?

Firm B

Enter Dont Enter

Low Price (3,21) (3,1)

Firm A High Price (4,5) (6,3)

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9474874

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