Innovations:Basic distinctionsProcessInnovation inCompetitiveandMonopolisticmarket:Leading to cost reductions inproductionProductInnovation:CreatesanewdemandcurveExampleprocessinnovation:Fiberblowinghttp://www.youtube.com/watch?v=m9Gg225ZB4kExampleproductinnovation:IPhoneTechnischeUniversiteitTUEindhovenUniversityofTechnology9/5/2013EconomicsofInnovation2013PAGE15
Innovations: Basic distinctions • Process Innovation in Competitive and Monopolistic market: Leading to cost reductions in production • Product Innovation: Creates a new demand curve • Example process innovation: Fiber blowing • http://www.youtube.com/watch?v=m9Gg225ZB4k • Example product innovation: IPhone Economics of Innovation 2013 9/5/2013 PAGE 15
Process innovations:Competitive marketPrice(P)4costsInitial consumer surplusLMC=ACMC2=AC2Demand curveQ1Q2Quantity（Q)TechnischeUniversiteitTUEindhoveneUniversity ofTechnology9/5/2013PAGE16EconomicsofInnovation2013
Process innovations: Competitive market Economics of Innovation 2013 9/5/2013 PAGE 16