Consider the following two-player sequential move game. Player 2 is the incumbent firm in a market while Player 1 is considering entering this market. If Player 1 does not enter then the game ends. Player 1 earns $0 and Player 2 earns $80 million. If Player 1 chooses to enter, then Player 2 has two choices: To Accommodate Entry or to Fight Entry. IF Player 2 chooses to accommodate entry, then Player 1 earns $10 million while Player #2 earns $50 million. Draw the game tree for this game and solve for the subgame perfect equilibrium.

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The Answer of Consider the following two-player sequential move game. Player 2 is the incumbent firm in a market while Player 1 is considering entering this market. If Player 1 does not enter then the game ends. Player 1 earns $0 and Player 2 earns $80 million. If Player 1 chooses to enter, then Player 2 has two choices: To Accommodate Entry or to Fight Entry. IF Player 2 chooses to accommodate entry, then Player 1 earns $10 million while Player #2 earns $50 million. Draw the game tree for this game and solve for the subgame perfect equilibrium.

Consider the Following Two-Player Sequential Move Game