Innovation,Market Structure and the Structure of the Economy: a micro-to-macro model

This paper presents a micro-to-macro model which connects an input–output model with price-dependent input coefficients and basic elements of industrial economics. This enables the determination of the most important variables on the micro, meso and macro levels, and, in particular, the determination of market structure and economic structure. On the basis of the model, we discuss the various intra-industry and interindustry impacts of process innovation. The results show the importance of considering heterogeneity of firms and sectors.