Answered: Entry Game with Identical Companies…

Entry Game with Identical Companies Number Gross Profit Net Profit of Firms per Firm per Firm 1 1,000 700 2 400 100 250 -50 4 150 -150 100 - 200 LO

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter15: Contracting, Governance, And Organizational Form

Section: Chapter Questions

Problem 2.1CE

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Question

Suppose the five potential entrants are identical in that each faces the same entry cost of $300. Given the total number of companies in the market, the accompanying table reports a company’s net profit (or payoff) if it enters. As before, the payoff from staying out of the market is zero, and each company can choose either enter or do not enter. Find all Nash equilibria.

Entry Game with Identical Companies
Number
Gross Profit
Net Profit
of Firms
per Firm
per Firm
1
1,000
700
2
400
100
250
-50
4
150
-150
100
- 200
LO

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