[Predatory conduct]

Suppose that the incumbent firm faces an inverse demand function P = 100 - Q, and has a total cost equal to TC=400+10q. The potential entrant can adopt the same technology with a total cost TC=400+10q. The incumbent firm first determines its quantity and commit to this amount. The potential entrant then determines whether it would enter and the quantity.

Questions:

1, Given that the entrant enters and the incumbent's quantity q1, the entrant's optimal strategy?

2, What is the minimum level of the incumbent's quantity that the entrant decides to stay out of the market?

3, The incumbent's profit if he adopts the limiting pricing strategy so that the entrant decides not to enter.

4, The incumbent's optimal profit if he does not adopt the limiting pricing strategy so that the entrant decides to enter.

5,Should the incumbent using limit pricing strategy to deter the potential entrant to enter?