In regard to predatory pricing to prevent entry of new firms, which of the following is correct? Choose any and all of the following that are correct. Incorrect choices will be penalized.
a. Ceteris paribus, an incumbent firm would like to be able to commit to carrying out predatory pricing against a firm that enters the market in order to convince the entrant its threat is credible.
b. Any Nash equilibrium in which an entrant stays out due to an incumbent firm's non-credible threat of predatory pricing if the entrant should enter is not subgame perfect.
c. Generally, it would not be in an incumbent firm's best interest to actually carry out the threat of predatory pricing should the entrant actually enter.
d. In models of predatory pricing to prevent entry of new firms, there is typically no Nash equillibrium.
e.
Some economists, notably of the Chicago-UCLA school, argue that the non-credibility of predatory pricing to prevent entry casts further doubt on the real-world existence/practice of predatory pricing.
