Two firms dominate the market for surgical sutures and compete aggressively with respect to research and development. The following payoff table depicts the profit implications of their different R&D strategies.

a. Suppose that no communication is possible between the firms; each must choose its R&D strategy independently of the other. What actions will the firms take, and what is the outcome?

b. If the firms can communicate before setting their R&D strategies, what outcome will occur? Explain. Firm B's R&D Spending Low Medium High Low 8, 11 6,12 5,14 Firm A's R&D Spending Medium 12,9 8, 10 6,8 High 11,6 10,8 4,6