Irene’s Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie’s Ice-cream. If it enters the market, Mattie’s can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.
In a sequential game, if Irene decides to enter the market, what would be Mattie’s best response?
a.
b.
c.
d.
