Suppose a firm faces a new entrant in one of the two markets that it operates in. If the firm pursues an aggressive pricing strategy following the rival firm's entrance, it will earn a loss of $10 million in that market, but this will deter entry of rival firms into the other market and earn the incumbent firm $70 million in that market over the next ten years. If the incumbent firm does not pursue an aggressive pricing strategy, then they will earn a combined $40 million between the two markets over the next ten years