Antelo Suárez, ManelBru Martínez, Lluís2023-02-132023-02-132021Antelo, M., Bru, L. Per-unit versus ad-valorem royalty licensing in a Stackelberg market. J. Ind. Bus. Econ. 49, 95–109 (2022). https://doi.org/10.1007/s40812-021-00205-xhttp://hdl.handle.net/10347/30066We consider licensing of a non-drastic innovation by a licensor that interacts with a potential licensee in a Stackelberg duopoly, comparing per-unit and ad-valorem royalty two-part contracts and showing why and when each licensing deal should be used. We contribute three findings to the literature. First, ad-valorem royalty is preferred when the licensor plays as leader in the marketplace, but per-unit royalty is preferred when the licensor plays as follower. Second, only innovations that do not hurt consumers are socially beneficial. Third, our model also suggests that both the licensor’s status as a leader or follower in the marketplace and the innovation size determine the incentive to engage in innovative activitieseng© 2021 The Authors. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/Atribución 4.0 Internacionalhttp://creativecommons.org/licenses/by/4.0/LicensingPer-unit royaltiesAd-valorem royaltiesLeaderFollowerWelfarejournal articles40812-021-00205-x1972-4977open access