申論題

2. Consider a two-period model with two firms, A and B. In the first period, they simultaneously choose one of two actions, Enter or Don't enter. Entry requires the expenditure of a fixed entry cost of 10. In the second period, whichever firms enter play a pricing game as follows. If no fim enters, the pricing game is trivial and profits are zero. If only o ters, it earns the monopoly profit of 30. If both firms cnter, they engage in competition as in the Bertrand model with homogeneous products

(a) Using backward induction, fold the game back to the first period in which firms make their choice of Enter or Don't enter, Write down the normal form (a 2 by 2 matrix) for this game. (6%)