Analysis on the Equlibrium of Industrial Innovation Based on Creative Destruction

As the most basic activity of enterprises, innovation has been the focus in the field of industrial organization. Industrial innovation, which implies the idea of creative destruction, makes the new products render previous ones obsolete. Analyzing on the research input of industrial innovation model, findings indicate that there are three possible equilibriums: stationary equilibrium, two-cycle and no-growth trap, and no-growth trap should be averted in order to keep the steady industry growth. The welfare property of stationary equilibrium indicates the laissez-faire (that is, profit maximization) average economy´s growth rate may be greater or less than the socially optimal level, implying the high economic growth rate conflicts with high customer welfare.