We analyze the efficiency gains and welfare effects of transferring sufficiently large, but non-drastic, technological innovations under firm-specific decreasing returns to scale. Our analysis employs a novel analytical framework based on normalized weights that are directly related to each firm’s profit-maximizing market share in Nash equilibrium. The more cost-efficient a firm’s production technology is—given decreasing returns to scale—the higher its normalized weight. Because the relationship between market share and profitability is shown to be strong, we identify cost thresholds at which the transfer of superior technology through collusion is beneficial for the firms involved and Pareto efficient for society, in the sense that consumers are indifferent between such collusion and competition without technology transfer. Our results have important implications for policymakers and practitioners, helping to explain the welfare effects of technology transfers among competing firms in highly concentrated, oligopolistic industries.