A firm (You) has to decide whether or not to enter a market which is serviced by a monopolist. Currently the monopolists earns $6 economic profits, while you earn $0. If you enter the market and the monopolist doesn't engage in a price war, you will each earn profits of $3. If the monopolistengages in a price war, you will lose $6 and the monopolist will earn $2.
(a) Write out the extensive form of the above game.
(b) What is the Nash equilibrium (equilibria) for this game? Explain.
(c) Is there a subgame perfect equilibrium? Explain.
(d) If you were the potential entrant, would you enter? Explain why or why not.