ized ▁by ▁Paul ▁K rug man ▁in ▁the ▁ 1 9 9 0 s ▁in ▁his ▁book ▁Ped d ling ▁Pro s per ity . ▁In ▁this ▁set ▁up ▁there ▁are ▁two ▁fir ms , ▁one ▁foreign ▁and ▁one ▁domestic ▁which ▁are ▁considering ▁entering ▁a ▁new ▁export ▁market ▁in ▁a ▁third ▁country ▁( or ▁possibly ▁the ▁whole ▁world ). ▁The ▁demand ▁in ▁the ▁export ▁market ▁is ▁such ▁that ▁if ▁only ▁one ▁firm ▁enters , ▁it ▁will ▁make ▁a ▁profit , ▁but ▁if ▁they ▁both ▁enter ▁each ▁will ▁make ▁a ▁loss , ▁perhaps ▁because ▁of ▁initial ▁set ▁up , ▁infrastr ucture , ▁product ▁development , ▁market ing ▁or ▁other ▁fixed ▁costs ▁of ▁entry . ▁The ▁matrix ▁below ▁presents ▁a ▁st yl ized ▁example ▁of ▁the ▁game ▁that ▁the ▁two ▁fir ms ▁are ▁engaged ▁in . ▁ ▁The ▁available ▁choices ▁of ▁the ▁domestic ▁fir ms ▁are ▁given ▁on ▁the ▁left , ▁while ▁those ▁of ▁the ▁foreign ▁firm ▁are ▁on ▁top . ▁The ▁first ▁number ▁in ▁each ▁cell ▁denotes ▁the ▁pay off ▁to ▁the ▁domestic ▁firm ▁while ▁the ▁second ▁number ▁is ▁the ▁pay off ▁to ▁the ▁foreign ▁firm . ▁ ▁The ▁game ▁with ▁no ▁government ▁subs id y ▁to ▁the ▁domestic ▁firm ▁is ▁shown ▁in ▁Figure ▁ 1 ▁on ▁the ▁left . ▁If ▁both ▁fir ms ▁enter , ▁they ▁each ▁suffer ▁a ▁loss ▁of ▁ 1 0 ▁million ▁dollars ▁and ▁if ▁they ▁both ▁stay ▁out ▁of ▁the ▁market ▁neither ▁firm ▁makes ▁a ▁profit ▁or ▁a ▁loss . ▁If ▁only ▁one ▁firm ▁enters ▁however , ▁that ▁firm