ABSTRACT
This chapter begins by differentiating between new product technology on the one hand and process technology which allows to produce existing goods at lower cost on the other. The former comprises innovations whose main effect is to create qualitatively new products. The counterpart to the conveyor belt for homogenous output was continuous processing; this technology spread through industries such as food processing and oil in the 1920s. In particular product lines there is of course a natural progress from product to process innovation. Once a product has been made commercially feasible, the profit-maximizing strategy is to reduce production costs. As long as the economy as a whole sees a relatively steady stream of new products, there is no reason why that which characterizes individual product lines should also characterize the aggregate economy. Schumpeter posited that a wave of product innovations would be associated with the beginning of an upswing in economic activity.
