Wal-Mart Stores, Inc., is an enormously successful chain of discount retail stores started by Sam Walton in 1993. Wat—Hart’s expansion strategy has been to charge less than ordinary department stores

Wal-Mart Stores, Inc., is an enormously successful chain of discount retail stores
started by Sam Walton in 1993. Wat—Hart’s expansion strategy has been to
charge less than ordinary department stores and small retail stores by relying on
size and high-inventory turnover. 3am Walton began opening his stores in small
Southwestem towns. By the mid—191’0s, other discount chains realized that
1il’iulaI—luliart has a profitable strategy. Since there are lots of small towns in the
United States, a race ensued to see who could be the first to get to each town.
Therefore, Wei-Mart found itself in a preemption game of the sort illustrated by the
payoff matrix to the right. The game’s Nash equilibrium lequilibria] is {are} for O A. Wal—Mart to enter and Company X to not enter and for Wal—Mart to not
enter and Company X to enter. 0 B. Both Wat—Mart and Company X to enter. 0 C. Wal—Mart to enter and Company X to not enter and for both WEI-Marl and
Company X to enter. 0 D. Company X to enter and Wel—l’ulart to not enter.
0 E. Wal—Mart to enter and Company X to not enter. Now suppose Wal-Mart moves first. will be the Nash equilibrium?
The game’s Nash equilibrium (equilibria) is (are) for
O A. Company X to enter and Wal-Mart to not enter.
O B. Wal-Mart to enter and Company X to not enter.
O C. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not
enter and Company X to enter.
O D. Wal-Mart to enter and Company X to not enter and for both Wal-Mart and
Company X to enter.
O E. Both Wal-Mart and Company X to enter. See attached images.

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