A typical result in patent licensing literature is that an insider patent-holder prefers licensing through royalties instead than through a fixed fee. However, when a commitment of no production is possible for the patent-holder, the result is reverted.

According to Chang et al. (2013), social welfare under licensing is lower than under no-licensing if the R&D efficiency is high. We show that this result is not correct, as when R&D efficiency is high social welfare is higher under licensing than under no-licensing.