Firm A is an established producer of smartphones whilst Firm B produces to a different market and is also considering a diversification strategy that involves entry into Firm A's market. Faced with the entry threat from Firm B, Firm A must decide whether to accommodate B's presence by cutting back its own output in the event that Firm B does enter, or plan to fight a price war with Firm B. If Firm B does not enter, Firm A earns a profit of R500 and Firm B a profit of R300. If Firm B enters and Firm A decides to accommodate, Firm A earns R200 and firm B earns R600. If A decides to fight firm B in a price war, both firms earn profit of R100.

a) If Firm A and Firm B decides their strategy simultaneously, identify pure strategy Nash equilibrium of this game

b) Suppose A can observe Firm B's decision as to whether to enter or not. Before Firm A takes the decision to accommodate or fight. Write down the extensive form representation of the sequential game

c) Is there a first mover advantage or second mover advantage in the sequential game?