Now there are three potential entrants (firm 1, firm 2, and firm 3) that simultaneously make...

Now there are three potential entrants (firm 1, firm 2, and firm 3) that simultaneously make entry decisions. If only one firm enters, the entering firm becomes a monopolist while the other firms that stay out get zero profit. If more than one firm enter the market, they play a Cournot game. The demand in the market is given by P = 6-Q.

Assume that there is no production cost, but there is an entry cost of 5 as before.

What are the Nash equilibria in pure strategies in the entry game?
What is the symmetric mixed strategy equilibrium in which each firm enters with a probability p.

Expert Solution

Explanation:-

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Rahul Sunny answered 1 year ago

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