Suppose the U.S. Supercomputers controls most of the world market but a group of entrepreneurs in the European Union is thinking of starting a rival to be called EU Supercomputers. A hypothetical payoff matrix for the two firms is given in the table below. U.S. Supercomputers are already in the market, and EU Supercomputers are thinking of entering. If the governments of the European Union offer a subsidy to EU Supercomputers of 10, then the equilibrium outcome is _____.
US Supercomputers
Stay in market Exit market
EU Supercomputer
Enter market U.S. (-25) U.S. (0)
EU (-25) EU (100)
Stay out of market U.S. (100) U.S. (0)
EU (0) EU (0)
Both firms do not produce
EU Supercomputers produces, U.S. Supercomputers does not
Not determined by given information
Both firms produce
U.S. Supercomputers produces, EU Supercomputers does not