See below.

PROBLEM: MULTIMARKET CONTACT AND COLLUSION When one large company competes with another, the two are likely to encounter each other in a considerable number of markets. This is true not only for multiproduct firms, which operate in different product markets, but also for single-product firms, which may operate in a number of distinct geographic markets. The goal of this question is to analyze how this "multimarket contact" between firms affects their ability to sustain collusive agreements. Consider a setting with infinitely many periods, t = 0, 1,2,.... At time t = 0, Firm E (Entrant) is considering which market to enter. There are three markets, A, B, and C. In each of these markets, the only firm operating is Firm I (Incumbent). Firm E has three options: (a) Enter market A; (b) Enter markets A and B; (c) Enter markets A and C. Firm E wants to understand whether it will be able to sustain a collusive agreement with Firm I in these markets. Below you are asked to evaluate each one of these options. Assume that the discount factor is the same for both firms and is denoted by S, where 0