incentive for entry and thus, increases competition. If technology of the incumbent and entrant is sufficiently close, licensing …

under Cournotcompetition compared to Bertrand competition when the initial cost difference of thesefirms is moderate; but …, for very small or very large cost initial cost differences, welfare ishigher under Bertrand competition. If licensing … occurs with per-unit output royalty,welfare is always higher under Bertrand competition. …