Write , where . For three distinct sites , the left, middle and right firms receive respectively
These follow by counting the two midpoint boundaries, including split ties. Therefore, after two firms occupy , the final entrant compares at , at , and at every available interior site. Omit an unavailable region and retain every maximizing tie. This is the final entrant payoff in a discrete location game.
First suppose opens at the central site . If chooses , the final entrant's best possible payoffs on the left, right and interior are at most , exactly , and at most , respectively. Hence 's unique best response is . The resulting payoff to is , uniquely maximized on that side at . Reflection gives the other optimal choice , followed by . Under either choice, receives only . Any mixture of the tied optimal second-mover choices has the same consequence.
Now let deviate to . If chooses , the unique final best response is , yielding at most . If chooses , the unique final best response is , yielding only two. Both classes will be strictly inferior to an available alternative, independently of how later ties are resolved:
  • If , can choose . The final entrant compares , and , so uniquely chooses . This gives exactly .
  • If , can choose site four after chooses two. All three remaining sites are final-mover best responses; they give payoffs five, four and three. Thus guarantees at least three, exceeding the excluded choices' payoff two.
Accordingly, in every subgame perfect equilibrium continuation after , the second mover must choose a site . This remains true with mixed strategies: every excluded choice pays strictly less than the displayed guaranteed alternative, under every possible continuation tie policy.
For any such , every legal final site gives at least three. If lies left of , then is the middle firm and receives . If lies right of , then is the left firm and receives . Thus the deviation gives at least , against every subgame-perfect continuation, whereas the central opening gives it .
Figure 1.
Final-mover ties and the second mover's guarantee after the first firm deviates on a nine-building street
. Details.
In this original example, a final-mover tie produces the line segment for : its points are expected payoff pairs from a mixed strategy over two final best responses. The second mover can independently secure eight by choosing , so only the segment to the right of that guarantee can support its optimal choice. Mixing over a tied final response cannot make the first mover's payoff fall below three.
A subgame perfect equilibrium must prescribe optimal continuation play even after the first mover's off-path deviation. Since the deviation is strictly profitable under every such prescription, no subgame perfect equilibrium can have open centrally. The argument does not select favourable ties or assume that off-path players cooperate with the deviator.