Sept 9, 1981. 
Dear doctor Osiatynski f 
Thank you for your comments on my paper inthe banca dl lavoro review 
which I shall try to answer a§ well as I can, 
I think there are three possible unfavorable effects of innovations 
on demand. 
1) There is an increase in the average mark-up in the industry. 
This will, if the volume of profit in the total economy is given, 
reduce utilisation. It is this effect which, I said, will be 
disappear once the diffusion is complete. It is true that this 
point may not be of importance if innovations succeed eachother 
and therefore the various phases if the innovation process 
exist simulanously 
2) There is the discouraging effect of the innovation on the 
innovators c mpetitors who loose market shares, ^’his e 
and are therefore inclined to stop or reduce investment simply 
because they have no money It is here tha,t I thought a different 
reaction might be possibles"Enforced rationalisation" perhaps with 
the help >f banks etc, a "flight forward". 
5) The capacity effect which in principle will always be there. 
What I talked about in the third paragraph on p 44 was 
a succession of innovations such thatthe capacity effects of the 
older innov iion is compensated by the investment effect of a newer 
innovation. Incidentally, it may betrue that the capacity 
effect of in the case of'enforced rationalisation" is even greater 
than it otherwise would be; that you mean,don't you? It has also 
been suggested to me by Tibor ^citovski. 
I hope this goes some way in answering your questions. 
With my best wishes 
Yours,