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What is the minimal fixed cost that will prevent? entry

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Reference no: EM132401137

An incumbent? firm, Firm? 1, faces a potential? entrant, Firm? 2, with a lower marginal cost.

sThe market demand curve

P=130-q1-q2

Firm 1 has a constant marginal cost of ?$40 per? unit,

Firm? 2 has a constant marginal cost of ?$10

To block? entry, the incumbent appeals to the government to require that the entrant incur extra costs. Suppose that the legal intervention imposed by the government leaves the marginal cost alone? (at ?$10 for Firm? 2) but imposes a fixed cost. What is the minimal fixed cost that will prevent? entry?

Reference no: EM132401137

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