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.”
Also see the help provided in the discussion preparation.
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.