Firms with different costs can make more money by sharing their technology through licensing agreements. When firms compete by setting prices (Bertrand competition), welfare might be lower than when they compete by setting quantities (Cournot competition). If firms pay a fixed fee to license technology, welfare is higher under Cournot competition when the firms are similar. If firms pay royalties, welfare is higher under Cournot competition when the technology gap is big and the licensor isn't too powerful. Technology licensing affects profits differently in Bertrand and Cournot competition.