Licensing innovation to less efficient markets boosts consumer welfare and economic welfare.
The article explores how a patent holder can make the most money by licensing a new technology to different industries. They found that it can be better to license to less efficient industries, especially in the downstream market. Using a per-unit royalty contract can bring in more money from the downstream sector, but not from the upstream sector. Licensing to both sectors may not always be more profitable than focusing on just one.