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Acme is currently the only grocery store in town. Bi-Rite is thinking of entering this market. They will play the following game. First, Bi-Rite will
Acme is currently the only grocery store in town. Bi-Rite is thinking of entering this market. They will play the following game. First, Bi-Rite will decide whether or not to enter. If it does not enter, then the game ends, Acme earns a payoff of $200 , and Bi-Rite earns a payoff of $0 . If Bi-Rite does enter, then Acme has to decide whether to fight by slashing its prices or to accommodate. If Acme decides to fight, then Acme and Bi-Rite each earn $negative 80 ; if Acme accommodates, then each earns $80
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