2.12 Due to learning by doing (Chapter 7), the more that an incumbent firm produces in the first period, the lower its marginal cost in the second period. If a potential entrant expects the incumbent to produce a large quantity in the second period, it does not enter. Draw a game tree to illustrate why an incumbent would produce more in the first period than the single-period profit-maximizing level. Now change the payoffs in the tree to show a situation in which the firm does not increase production in the first period. (See Solved Problem 13.3.)