Find a symmetric nash equilibrium in mixed strategies

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Reference no: EM132207412

Question: Total of n>2 companies considering entry into a new market. The cost of entry is 30. If only one company enters, then its gross profit is 200. If more than one company enters, then each entrant earns a gross profit of 40. The payoff to a company that enters is its gross profit minus its entry cost, while the payoff to a company that does not enter is 50.

a) Show that if n=3, then there is a symmetric Nash equilibrium in mixed strategies in which each firm enters with probability 0.5

b) Find a symmetric Nash equilibrium in mixed strategies for arbitrary number of firms n (hint: the probability of each firm enters the market will depend on n)

Reference no: EM132207412

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