Question

In a given market (inverse) demand is P 1-9. Comader an incumbent firm and a new entrant. At tittie t = 1, the incumbent decides how much to invest in a technology that reduces its marginal cost from c to c-1, by spending At time t = 2 the potential entrant, after observing the incumbent investment, decides whether to enter the market. Entry requires to pay the fixed cost F. The entrant has marginal cost c At time t-3 active firms compete á la Cournot. Determine the values of F such that entry is blockaded, accommodated and deterred.​

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