If an incumbent faces an identical potential entrant with no costs of entry,the incumbent will
A) produce the Cournot duopolist level of output.
B) produce the Stackelberg leader level of output.
C) set price equal to marginal cost.
D) shut down.

Question

Quizplus · Accepted Answer

In this scenario, the incumbent would act as a Stackelberg leader to deter entry by producing at a level that makes entry unprofitable for the potential entrant. This strategic move leverages the first-mover advantage to secure a dominant position in the market.

If an Incumbent Faces an Identical Potential Entrant with No