Use the prompt below to answer questions #29-30. A mall has…
Use the prompt below to answer questions #29-30. A mall has a single shoe store, the incumbent firm. The incumbent may pay the mall’s owner an amount b to add to a clause to its rental agreement that guarantees the incumbent the exclusive right to be the only shoe store in the mall. If this payment is made, the landlord agrees to rent the remaining space only to a restaurant, a toy store, or some other business that does not sell shoes. The game tree below shows the two stages of the game involving the incumbent and its potential rival, another shoe store. In the first stage, the incumbent decides whether to pay b to prevent entry. In the second stage, the potential rival decides whether to enter. If it enters, it incurs a fixed cost fee of F to build its store in the mall.