Scenario 13.17 Consider the Entry-Deterrence Game Below. the Potential Entrant Would Have

question 65

Multiple Choice

Scenario 13.17
Consider the entry-deterrence game below. The potential entrant would have to spend some amount in sunk costs to enter the market.
-If the game in Scenario 13.17 were to be infinitely repeated, waging a price war might be a rational strategy:

• A) because there would be no short-term losses.
• B) because the short-term losses might be outweighed by long-term gains from preventing entry.
• C) if the potential entrant were irrational.
• D) if the monopolist had excess capacity.
• E) if there were no sunk costs to the potential entrant.