Table 1 Four alternative scenarios. Source own table
From: Product competition and R&D investment under spillovers within full or partial collusion games
Four alternative scenarios | First stage (R&D) | Seconde stage (production) |
|---|---|---|
Full competition (regime F) | Firms compete in R&D; each firm decides its own R&D level given R&D efforts of the other firm | Firms compete; each firm decides its own output to maximize the individual profit |
Semi-collusion in Production (Production Cartel) (regime P) | Firms compete in R&D; each firm decides its own R&D level given R&D efforts of the other firm | Firms coordinate their production activities to maximize the joint profit |
Semi-collusion in R&D (R&D Cartel) (regime R) | Firms coordinate their R&D activities to maximize the joint profit; cooperative behavior in R&D does not change the level of spillovers | Firms compete; each firm decides its own output to maximize the individual profit |
Full collusion (Horizontal Merger) (regime M) | Firms coordinate their R&D activities to maximize the joint profit; cooperative behavior in R&D does not change the level of spillovers | Firms coordinate their production activities to maximize the joint profit |