State the two alternatives of Policy Clustering

That combines an element from each of these first two alternatives. One might think of it as a set of processes characterized by interdependent, but uncoordinated, decision making. Under this conception, governments are independent in the sense that they make their own decisions without cooperation or coercion but interdependent with reference to the choices of other governments. In other words, they are uncoordinated interdependence. This is exactly the class of mechanisms for which we reserve the term clustering diffusion.