Скачать или смотреть Suppose that an incumbent can commit to producing a large quantity of output before the potential e…

Suppose that an incumbent can commit to producing a large quantity of output before the potential entrant decides whether to enter. The incumbent chooses whether to commit to produce a small quantity, q, or a large quantity. The rival then decides whether to enter. If the incumbent commits to the small output level and if the rival does not enter, the rival makes 0 and the incumbent makes 900 . If it does enter, the rival makes 125 and the incumbent earns 450 . If the incumbent commits to producing the large quantity, and the potential entrant stays out of the market, the potential entrant makes 0 and the incumbent makes 800. If the rival enters, the best the entrant can make is 0, the same amount it would earn if it didn #x27;t enter, but the incumbent earns only 400 . Show the game tree. What is the subgame perfect Nash equilibrium?

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