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The description in Incendiary Ammo says the following:

Duration: lasts until overridden by another ammo power

Fire Damage: 20% of weapon damage over 3.0 seconds

Both Jacob and I have Incendiary Ammo. If we both have it active, what happens when we both shoot the same enemy? Let's say I shoot first. Will the duration of the first application be canceled when Jacob fires, will the total burning time be added together, or what?

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Perhaps I misunderstood your question? Let me know (or do it yourself) if you think the title needs to be rolled back. – Raven Dreamer Feb 24 '12 at 18:34
@RavenDreamer: I think you're right in your title edit. In the context of ME2, both titles mean basically the same thing, but your edit makes it clearer. – MBraedley Feb 24 '12 at 21:20
up vote 3 down vote accepted

The description is perhaps a bit clumsy. It simply means that you can only have one ammo power active per weapon. For example, if you have Disruptor Ammo on your pistol and activate Incendiary Ammo, the effect of the Distruptor Ammo is cancelled.

I can't find a reliable source for whether the DoTs stack, however it doesn't matter all that much since the bonus damage is dealt instantly to armor, which is the main thing you need to worry about on higher difficulties.

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