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 |