In general the entry-deterrence game will generate a market price

Question

Quizplus · Accepted Answer

In an entry-deterrence game, incumbents may engage in strategic behavior to deter new firms from entering the market. This often involves setting a lower price than would be optimal to serve as a competitive threat to potential entrants. As a result, the market price will be lower than the monopoly price but higher than the duopoly price, as there will be some degree of competition between the incumbents.

In General the Entry-Deterrence Game Will Generate a Market Price