In a sequential game, the first mover into a new market

Question

Quizplus · Accepted Answer

The first mover in a new market may discourage the second mover from entering by establishing brand recognition, acquiring resources or patents, or by lowering prices to a level that the second mover cannot match. This strategy is known as strategic deterrence and aims to discourage potential rivals from entering the same market. Therefore, B is the correct answer. Options A, C, and D are incorrect because they make assumptions that may or may not be true in all cases. For example, the first mover does not always earn a greater payoff than the second mover (option A). Furthermore, a dominant strategy may not always exist (option C), and a Nash equilibrium is not always guaranteed (option D) in sequential games.

In a Sequential Game, the First Mover into a New