Imagine a market setting with three firms. Firms 2 and 3 are already operat- ing as monopolists in two different industries (they are not competitors). Firm I must decide whether to enter firm 2's industry and thus compete with firm 2 or enter firm 3's industry and thus compete with firm 3. Produc- tion in firm 2's industry occurs at zero cost, whereas the cost of production in firm 3's industry is 2 per unit. Demand in firm 2's industry is given by p = 9 Q, whereas demand in firm 3's industry is given by p' = 14 Q', where p and Q denote the price and total quantity in firm 2 's industry and p' and Q' denote the price and total quantity in firm 3's industry. The game runs as follows: First, firm I chooses between E2 and E3. (E2 means "enter firm 2's industry" and E3 means "enter firm 3's industry") This choice is observed by firms 2 and 3. Then, if firm I chooses E2, firms I and 2 compete as Cournot duopolists, where they select quantities q 1 and simultaneously. In this case, firm 3 automatically gets the monopoly profit of 36 in its own industry. In contrast, if firm I chooses E3, then firms I and 3 compete as Cournot duopolists, where they select quantities qi and q'3 simultaneously; and in this case, firm 2 automatically gets its monopoly profit of 81/4.