produce an environmentally friendly good through R&D or licensing obtained from the domestic firm. However, this does not … licensing, governments may intervene to shift the rent from the domestic firm. In certain circumstances, the shifted rent could … exceed the amount paid by the foreign firm for licensing. …

serve the market, the foreign firm has to acquire a production technology through either R&D or licensing obtained from the … domestic firm. In the presence of both R&D and licensing, the domestic firm deters the foreign firm from engaging itself in R … licensing. …