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I was reading about what makes reasonable grounds for rejecting a paper and came across the following statement:

... two major revisions are not allowed.

Does it mean that only two rounds of review at the maximum are allowed? Is this always the case? I do remember recommending major revision twice, and indeed the editor stopped the review process and decided to accept the paper without the authors having to revise their paper the second time.

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Long answer short- It depends on the editorial policy of the specific journal or the current editor.

In my field, 4 or more rounds of revisions is not completely unheard of. Despite people's frustration with such policy of unlimited number of revisions (Imagine being that person who got a rejection after 4 major revisions and the manuscript being under review for 3 years? --- this is not uncommon in the social sciences), some journals do retain such policy. The top 2 journals in sociology are notorious for this.

I currently serve on an editorial board of a reputable journal in the field (one of the top 5), where the current editor has changed the journal policy to not extend second R&Rs. In this journal, you only get once chance to revise, and the result of the revise can either be an outright accept, conditional accept (which will come back with very minor change suggestions-- for example, cite an overlooked source, change the title of the paper, rewrite the conclusion, etc), or reject. I think this is a positive step forward, especially since many editors in the field tend to be very nitpicky about minor/aesthetic issues.

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    A collaborator of mine uses to say "A second major revision is worse than a reject. With a reject, you can at least submit somewhere else." I agree that the practice of keeping papers in an endless loop of major revisions is very damaging, and should be stopped. After one round of major revisions it should usually be pretty obvious to editor, reviewers and authors whether the paper will "get there" or not. Every round of major revision after that is just delaying timely publication.
    – xLeitix
    Feb 28, 2014 at 12:21
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Is this always the case? No.

However, I often see reviewing software that does not have the "major revision" category for the second revision. On the other hand, a colleague told me that he had a paper in the seventh revision at a very respectable journal (actually it was a debate about proof details in math…).

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Q: Does it mean that only two rounds of review at the maximum are allowed? A: No

As long as the authors keep failing to address the concerns of the reviewers, the paper can potentially end up on a long loop of repeated revisions that are required.

It is important to fully address the concerns of the reviewers.

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Does it mean that only two rounds of review at the maximum are allowed?

In this particular case, it appears so.

Is this always the case?

No. Different journals will have different policies. For example, there's a journal in my field that has a reputation for indulging many rounds of review, and I've seen papers there go over two rounds - indeed, I just finished my third review for a paper.

However, as a general rule, two rounds of review both of which came back "Major Revisions" is likely a bad sign, as it means that there remain substantial problems with a paper even after substantial work should have been done. There's a number of reasons that might be true - the revisions introduced new errors, one of the reviewers or the authors are digging in their heels, etc. After two rounds of being nowhere near acceptable, it's possible the editor will start looking to cut their losses.

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