Behavior of firms in oligopoly

Reference no: EM1317001

Suppose that the software market currently has one firm operating -Microhard. A new firm Newvel could enter the industry. Each firm requires $80 million to operate in each period. The game lasts for two periods, The probablity of the market being good is 0.25. Microhard can self-finance this operating cost but Newvel needs to borrow money from a bank at a competitive rate.

What contract should be writen between the bank and Newvel?

Reference no: EM1317001

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