Boomerang Effects of Wells Effects?

Abstract

As a home firm licenses technology abroad, foreign companies begin competing against home products. An attempt to enhance revenues by selling knowhow abroad might "boomerang" back to reduce profits. Foreign entry into the final goods industry, however, may stimulate home exports of intermediate goods to the foreign country ("wells effects"). This upstream expansion may partially of more than offset the profit loss in the home downstream industry. Net gains from technology licensing could go in either direction a priori.