Like any other business strategy, deterring entry is a good idea only if it has a higher payoff than alternative strategies. Use the following decision tree to decide whether Apple should deter Dell from entering the market for very thin, light laptops. Assume that each firm must earn a 15 percent return on its investment to break even.

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Apple Decision: Charge High Price or Low Price $1,000 $800 Dell Decision: Enter or Don't Enter Dell Decision: Enter or Don't Enter Enter Don't Enter Enter Don't Enter Rates of Return Apple Dell 10% 10% Rates of Return Apple Dell 20% Rates of Return Dell 24% Apple 24% Rates of Return Apple Dell 45%