To deter GasTwo’s entrance in either region, GasOne’s executives plan to

initiate a price war lasting for two years: If GasTwo opens a petrol station in
a region, GasOne will lower prices in that region, forcing GasTwo to do the
same, to the point where each firm’s profits from petrol sales in the region
drop to zero.
a) Represent the above sequence of decisions in an extensive form game
by estimating, for each firm, the sum of profits from North Aegean and
South Aegean, for 2021 and 2022 respectively. [Hints: (a) You must
provide all the necessary calculations for the entries of the game tree. (b)
Each firm’s profits for 2022 must be calculated without any discount.]
b) Use backward induction to find the Subgame Perfect Nash Equilibrium
(SPNE) of the game.
c) Does the price war strategy employed by the GasOne constitute a
credible threat?
d) Describe a GasOne’s strategic move that may help it obtain higher profit
and provide a numerical example. [Hint: Feel free to assume any possible
scenario including inter alia threat, promise, commitment if it changes the
SPNE of the game]