The article explores how a new technology for better products can be introduced into a market with existing firms. It looks at how the innovating firm can either sell licenses to current firms, enter the market with or without a license, and how this affects pricing and competition. The study uses a two-step auction model to analyze the situation. The researchers found that the optimal strategy for the innovating firm depends on consumer preferences and costs, and that licenses can be sold using a mix of royalties and fixed fees.