In this paper, a theoretical model of the impact of product and process innovations on output, capacity utilization, employment, and prices is developed. The model is estimated with a unique set of microdata from West German manufacturing firms. The empirical results reveal that innovative firms are more successful. They show a higher utilization and more output and employment growth than noninnovative firms. Innovations also change market behavior. In sectors with a large share of product innovators, firms more often change employment and less often change prices, i.e., product innovations reduce price competition. Copyright 1998 by Blackwell Publishing Ltd
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Volume (Year): 46 (1998) Issue (Month): 3 (September) Pages: 359-81 Download reference. The following formats are available: HTML
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