If an Incumbent Cannot Commit and Faces an Identical Potential

question 8

Multiple Choice

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded,the incumbent will

• A) produce the Cournot duopolist level of output.
• B) produce the Stackelberg leader level of output.
• C) set price equal to marginal cost.
• D) produce a level of output that is greater than the Stackelberg leader level of output.