Let us analyze an entry-exit two-stage game in which firm A is the incumbent and firm B is a potential entrant. In stage I, firm B chooses whether to enter into A's market or whether to stay out. The cost of entry is denoted by E. In the second stage, firm A decides whether to stay in the market or exit.

Let us analyze an entry-exit two-stage game in which rm A is the incumbent and rm B is a potential entrant. In stage I, rm B chooses Whether to enter into A's market or whether to stay out. The cost of entry is denoted by e. In the second stage, rm A decides Whether to stay in the market or exit. Firm 3 The game tree reveals that rm A can recover some of its sunk entry cost by selling its capital for the price 45, Where 0 3 qt S e . a. Obtain the subgameperfect equilibrium strategies of both rms assuming that e