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Please answer question 11p=220q1q2. Firm 1 has a constant marginal cost of $40 per unit, while
Firm 2 's is $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 $10 for Firm 2) but imposes a fixed cost. What is the minimal fixed
cost that will prevent entry? The minimum fixed cost (F) that will deter entry is F=$.

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Block Entry: Minimal Fixed Cost to Prevent Competition

  • 1. Please answer question 11p=220q1q2. Firm 1 has a constant marginal cost of $40 per unit, while Firm 2 's is $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 $10 for Firm 2) but imposes a fixed cost. What is the minimal fixed cost that will prevent entry? The minimum fixed cost (F) that will deter entry is F=$.