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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