... one of the “state” variables of the game. The other state variable of the game is the identity of the Leader, {}1, 2G∈≡A . Together, summarize all the payoff-relevant information of the ... denotes the total number of innovation steps that the leading firm has over the competitor. The value of the entire game to the firms, from the perspective of the initial period and under the two ... out and the winner becomes a monopolist in both the exploitation of the innovation and in further R&D activities. Under the RE regime, on the other hand, both firms can participate in the...