Swan Lake Lumber (yes that is a real place) in Crooked Creek, Alberta is considered a lumber monopoly, as there are no lumber mills within 100 km. Nutcracker Lumber (that is not a real place) is considering entering the lumber industry in Crooked Creek. Nutcracker first decides whether or not to enter, and then Swan Lake decides whether or not to cut its price (fight) in response. If Nutcracker decides to stay out, it gets a payoff of 0 and Swan Lake gets a payoff of 8 as a monopolist. If Nutcracker decides to enter the market, two firm's payoffs depend on whether Swan Lake fights or not. If Swan Lake fights, then both firms end up with a negative payoff of 4. If Swan Lake decides not to fight, they divide the market profit, and both get a payoff of 4.

a) Present this game information in an extensive form.

b) Solve for the backward induction outcome.

c) Can entry deterrence arise in equilibrium in this game? Explain.