This article considers the licensing strategies of eco-technology when an innovator
provides pollution abatement goods to oligopolistic polluting firms that produce
consumption goods and emit environmental pollutants. In the presence of emission tax, two
types of licensing contracts, royalty and fixed-fee, are examined to analyze market
equilibrium and to compare their welfare consequences. We show that an eco-innovator
provides a non-exclusive license under a royalty contract while it might exclude polluting
firms under the fixed-fee licensing contract. However, when mixed licensing contract where
royalty and fixed-fee contracts are combined together is available, we show that ecoinnovator
provides non-exclusive license. We also show that, compared to royalty licensing,
exclusive fixed-fee contract will increase the welfare but its welfare effect depends on the
level of emission tax. Finally, we derive the optimal emission tax and show that an
appropriate emission tax combined with non-exclusion policy or profit-cap regulation can
increase the welfare.