Patent race between firm r and firm s

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Consider a patent race between Firm R and Firm S. Suppose that the patent is worth $25. The costs of R&D are $2, $7, and $15 million for moving 1,2, and 3 steps, respectively. Solve the game by backward induction, and draw a location space figure that shows Trigger Zone I and Trigger Zone II, as well as Safety Zone I and II for R and S. Also assign the locations at the southwest corners of the Trigger Zones I and II.

Reference no: EM132592491

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