A monopolist (Firm 1) may be a low-cost type, with constant
marginal cost of production 10, or a high-cost type, with constant
marginal cost of 20, with probabilities p and 1-p respectively. It
has no fixed cost. Only the monopolist knows his type. The game has
two stages. In stage one, a potential entrant (Firm 2) with
constant marginal cost of 15 decides whether to enter the market.
Entry requires a fixed investment of $100. If Firm 2 enters the...