Sequential-Move Game Strategy
We consider a sequential-move game in which an entrant was consider entering an industry in competition with an incumbent firm. Consider now that the entrant, if fought, has the possibility of withdrawing from the industry or staying (at a loss of 5 for each [layer).
What is the equilibrium of this game?
Discuss if the entrant is better off with or without the ability to withdraw.
In this case you have to look at the equilibrium path where each player is maximizing the payoff by taking... View the full answer