Installing common library seems to install additional node_modules within the library - reactjs

Question

Overview
I have created a common react library to be used within a range of applications. I had no issues with it prior to upgrading on of the applications to React 18.
I am using rollup to do the library configuration and the library also has a documentation site.
Issue
When I download the package from artifacts it seems fine and works but when I install the package it seems to create a node_modules folder within the library and install an older version of React.
This causes a React version mismatch error and stops the app from running until I manually delete the node_modules folder, it then runs correctly without issue.
Additionally this behaviour doesn't happen in a different application we have which is running React 17.0.2, it seems to only have become an issue in our React 18 apps.
Example
Here you can see that the package has it's own version of React installed which doesn't exist when I download the package directly from artifacts.
Rollup configuration
The library is running React 18 and so is the application and we use Rollup to do the library configuration.
export default {
input: './src/lib/index.ts',
output: [
{
file: packageJson.main,
format: 'cjs',
sourcemap: true,
preserveModules: false
},
{
file: packageJson.module,
format: 'esm',
sourcemap: true,
preserveModules: false
}
],
plugins: [
peerDepsExternal(),
commonjs(),
typescript({
tsconfigOverride: {
exclude: [
'**/__tests__',
'**/*.test.ts',
'**/*.test.tsx',
'./src/tests',
'./src/examples',
'**/*.example.ts',
'**/*.example.tsx',
'**/ApplicationRouter.tsx',
'**/index.tsx'
],
include: ['src/lib']
}
}),
postcss({
extract: true,
minimize: true,
use: [
['sass', {
includePaths: [
'./src/lib',
'./node_modules'
]
}]
]
})
]
};

Answer 1

I think it's the npm version causing the problem. If you are using npm >=v7 try to install the dependencies with
npm i --legacy-peer-deps
And see if that solves the problem.
Also, I see you are creating a React Component Library, there's a tool Create React Package lets you do this with Rollup, Babel, ESLint, TypeScript, and PostCSS already set up. So you can focus on the code rather than configuration.