Consider a two-stage game in which firms first make a strategic choice such as product design, location

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Consider a two-stage game in which firms first make a strategic choice such as product design, location on a Hotelling line, capacity, advertising, etc., and, second, compete in prices or quantities. Why is sub-game perfect equilibrium a useful equilibrium concept? What sort of "crazy" Nash equilibria might be ruled out?
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Intermediate Microeconomics and Its Application

ISBN: 978-1133189039

12th edition

Authors: Walter Nicholson, Christopher M. Snyder

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