Antelo Suárez, ManelBru Martínez, Lluis2023-03-152023-03-152023Research in Economics 77 (2023). https://doi.org/10.1016/j.rie.2023.02.0011090-9443http://hdl.handle.net/10347/30320We study in a Stackelberg industry the licensing of a product that embodies an innovation (quality-improving product) whose owner may be the firm that plays as a leader or a follower in setting output in the the product market. We find that the innovation is transferred (and social welfare is reduced) if its owner is the market-leader firm. However, if the innovation is in the hands of the market-follower firm, it is not licensed, even though licensing would be welfare enhancing. Thus, subsidizing R&D with the mandatory licensing of the resulting innovation may be a socially desirable policyeng©2023 The Author(s). Published by Elsevier Ltd on behalf of University of Venice. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)Attribution-NonCommercial-NoDerivatives 4.0 Internacionalhttp://creativecommons.org/licenses/by-nc-nd/4.0/Product innovationLicensingPer-unit and ad-valorem royaltiesMarket leader and market followerWelfarejournal article10.1016/j.rie.2023.02.001open access