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economy by providing a flow of new products and cost-saving machinery and techniques. Economists have long been concerned with the possible effects of market structure in shaping the firm's commitment to bring forth new innovations. The Schumpeter hypothesis (which will be explained in the next section of this paper) is one prominent example. The foundations and implications of this theory are explored in this paper. Empirical evidence is then offered which questions the ability of the Schumpeter hypothesis to explain interfirm differences in innovative behavior.
Joel B. Rosenberg (Wed,) studied this question.