The Source of Technological Innovation
Private firms in market economies may attempt the exploration and devel opment of new products and processes, if they know of the existence of some unexploited scientific and technical opportunities. They may also allocate resources to technological activities for innovating their products and processes, if they know of the existence of a market and some eco nomic benefits from the innovations. In turn, innovations of private firms may, if successful, change their production costs, quality of products, sales and eventually market position. The accumulation of innovations may increase their market competitiveness and, ultimately, lead to the evolution of the industry involved.