Now there are three potential entrants (firm 1, firm 2, and firm 3) that simultaneously make entry
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Question:
Now there are three potential entrants (firm 1, firm 2, and firm 3) that simultaneously make entry decisions. If only one firm enters, the entering firm becomes a monopolist while the other firms that stay out get zero profit. If more than one firm enter the market, they play a Cournot Offense game. The demand in the market is given by P = 6Q. Run Wide Left Run Up Middle Run Wide Right Defend against Wide Run Defense Defend against Middle Run 3 Assume that there is no production cost, but there is an entry cost of 5 as before.
a. What are the Nash equilibria in pure strategies in the entry game?
b. What is the symmetric mixed strategy equilibrium in which each firm enters with a probability p.
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