An Incumbent's Threat to Retaliate After a Potential Competitor Enters

question 54

Multiple Choice

An incumbent's threat to retaliate after a potential competitor enters the market will be taken seriously by potential competitors if

• A) the incumbent can still earn a profit after carrying out the threat.
• B) the incumbent earns greater profit carrying out the threat than by accommodating entry.
• C) the potential entrant cannot earn a profit if the threat is carried out.
• D) the potential entrant's profit exceeds the incumbent's if the threat is carried out.