Asked by Lisbeth Molina on May 09, 2024

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In a sequential game with two firms,the first mover into a new market:

A) is guaranteed positive economic profits.
B) is assured of blocking any potential second mover from entering the market.
C) runs the risk that the untested new market will not provide enough customers.
D) will likely set a high price to reap greater profits until the second mover enters.

Sequential Game

A strategic interaction (game) between two or more parties (players) in which each party moves (makes a decision) in a predetermined order (sequence).

Economic Profits

The profit a company makes after deducting both its explicit and implicit costs.

  • Discern between simultaneous and sequential games in the realm of strategic business conduct.
  • Evaluate the significance of first-mover advantage within competitive environments.
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HM
hussein mersalMay 14, 2024
Final Answer :
C
Explanation :
The first mover in a new market runs the risk that the market may not provide enough customers, which can result in negative economic profits. Therefore, option C is the best choice. Option A is false because there is no guarantee of positive economic profits in a new market. Option B is not necessarily true because a second mover can still enter the market if there is demand for the product or service. Option D is also not always true because the first mover may choose to set a lower price to gain market share before the second mover enters.