at the moment solo inc. is a monopolist in the market for digital movie cameras. The demand function is given by:

D(p) = 8- 2p

Anchio Inc. has announced that it intends to enter the market next year with a somewhat different type of cameras. Solo is worried about this and has hired the services of a consulting firm

which came up with the following analysis:

- We found out that Anchio is contemplating an alternative investment that will give them a profit of 2. Thus it will not enter this market unless it express to make a profit of more than 2.

- If you don't do anything and Anchio enters, let you be firm 1 and Anchio firm 2, we estimate that demands will be given by:

D1(p1,p2) = 7- 3p1 + 2p2 + and D2(p1, p2) = 3.5 + 3p1 - 4p2

- You have the option of carrying out massive advertising that costs $F and that would increase the demand for your product and also create

a perception that Anchio's product is of lower quality than yours. If you take this option then:

- if entry does not take place your demand function will increase to D(p) = 6 - p

- If entry takes place then Anchio's demand is going to be lower. We estimate then the demands to be:

D1(p1, p2) = 7- 3p1 + 2p2 and D2(p1, p2) = 3p1 - 4p2

in the following assume that production costs are zero for everybody.

A: Represent solo's decision to carry out or not the advertising campaign and the subsequent decision of Anchio to enter or not and the price competition they would engage in if Anchio

enters, as an extensive-form game.

B: For which values of F will Solo decide to carry out the advertising campaign?

C: In the cases Solo decides to advertise, could it be accused of anti-competitive behavior?

Why or why not?