23 Jul WHAT COULD FIRM A DO TO MAKE ITS THREAT CREDIBLE WITHOUT BUILDING EXCESS CAPACITY?
QUestion: Show how th Show more Firm B Enter Dont Enter Low Price (321) (31) Firm A High Price (45) (63) QUestion: Show how the payoff matrix in the table for Problem 10 might change if firm A were to make a credible threat to lower the price by building excess capacity to deter frim B from entering the market. (Question 10 asked: Given the following payoff matrix (a) indicate the best strategy for each firm. (b) Why is the entry-deterrent threat by firm A to lower the price not credible to firm B? (c) What could firm A do to make its threat credible without building excess capacity? Show less
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