Technology and Innovation

Technology and innovation are considered as the second driving force in the economy. They may influence structure differently in different market structures. Some innovations build on competencies that established firms must already have in order to be active in the industry; however, other innovation that require additional competencies. The “destructive” power of an innovation depends on how “different” the competencies related to new technology is from the competencies of old technology (http://www.intech.unu.edu/publications/conference-workshop-reports/lisbon/lotz.pdf). The purpose of this paper to explain how technology and innovations influence market structures.
Perfect Competition
In a perfect competition firms do not have incentive for innovation. They do not earn profits and may not be able to get the money need to devote to research and development, which will lead to technological changes. A perfect competitive market would quickly transfer the gains of ...