Advertising as barrier to entry

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Advertising as a Barrier to Entry: Consider the market for soft drinks. It is often said that advertising by an existing firm (say Pepsi) is a barrier to entry for other firms (say Joe's Cool-Aide Company) that might be considering entry into the market for soft drinks hoping to make a profit. Using the notion of sub game perfection, construct an extensive form game that supports this assertion. What is the crucial assumption, or assumptions, in your game? Does your game convince you that advertising is a barrier to entry? Explain.

Reference no: EM131096142

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