Consider the chain-store game as described in subsection 9.2.1. Suppose that there is a single…

Consider the chain-store game as described in subsection 9.2.1. Suppose that there is a single potential entrant, two markets (A and 131, and two periods. The entrant can enter each market at most once and can enter at most one market per period, but he can choose which market to enter first. The incumbent is either tough in both markets or weak in both; the entrant is weak with probability 1. The tough incumbent always fights. Payoffs for the weak players in market A are as in subsection 9.2.1: The incumbent gets a if no entry, 0 if accommodate. — 1 if fight; the entrant gets h if accommodate, 0 if no entry, — 1 if fight. In market B, which is “big.” all these payoffs are multiplied by 2. Which market should the entrant enter first? (Hint: Why might entering both markets at once, if feasible, be better than sequential entry?)