Regularities concerning how entry, exit, market structure, and innovation vary from
the birth of technologically progressive industries through maturity are summarized.
A model emphasizing differences in firm innovative capabilities and the importance
of firm size in appropriating the returns from innovation is developed to explain
the regularities. The model also explains regularities regarding the relationship
within industries between firm size and firm innovative effort, innovative productivity,
cost, and profitability. It predicts that over time firms devote more effort to process
innovation but the number of firms and the rate and diversity of product innovation