Consider the following innovation game.Firm A must decide whether or not to introduce a new product.Firm B must decide whether or not to clone firm A's product.If firm A introduces and B clones, then firm A earns $1 and B earns $10.If A introduces and B does not clone, then A earns $10 and B earns $2.If firm A does not introduce, both firms earn profits of 0.Which of the following is true.
A) The subgame perfect Nash equilibrium profits are ($10,2) .
B) It is not in A's interest to introduce.
C) Firm A does not care if B clones.
D) None of the statements associated with this question are correct.
Correct Answer:
Verified
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