Consider the Following Innovation Game: Firm a Must Decide Whether

Multiple Choice

Consider the following innovation game: Firm A must decide whether or not to introduce a new product.Firm B must decide whether or not to clone firm A's product.If firm A introduces and B clones,then firm A earns $1 and B earns $10.If A introduces and B does not clone,then A earns $10 and B earns $2.If firm A does not introduce,both firms earn profits of 0.Which of the following is true?

A) The subgame perfect Nash equilibrium profits are ($10, $2) .
B) It is not in A's interest to introduce.
C) Firm A does not care if B clones.
D) None of the preceding answers is correct.