Consider the following two-stage game. at time1, an incumbent firm (firm1) chooses its price p1. at time2, a potential entrant (firm2) decides whether to enter, and if so, chooses its price p2. if firm2 enters, it must pay a fixed cost F<1/4. market demand is Q=1-P, where P is equal to the minimum of p1 and p2. assume that when bothe firms set the same price , all the demand goest ot firm2. assume all demand goes to the firm with the lower price when the firms' prices differ. the MC for both firm =0
a) take p1 as give. conditional on entering , what price will firm 2 set?
b) for what values of p1 will firm2 enter?
c) what price will firm 1 choose at time1?
Please can someone help me??? exam in 1 one day ...thanks!!!!!!!!! xxxx
Who do you think it is...