(Answered) We considerer a sequential move game in which an entrant

Economics

We considerer a sequential move game in which an entrant was considering entering an industry in competition with an incumbent firm(Figure 15-1). Consider now that the entrant, if fought, has the possibility of withdrawing fromt he industry (at a loss of 1 for the entrant and again of 8 for the incumbent), or staying (at a lossof 5 for each player). What is the equilibrium of this game? Discuss if the entrant is better off with or with out the ability to withdraw

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