Technology Matters Q1: Professor Peter Howells:  Chris, You've been doing observational work on business innovation for the last twenty  years or so. Can you explain the basic principles?  Dr Chris Farrell:  I became motivated to discover how innovative new technologies displace old ones when  my own inventions started to do just that. The basic principle I adopted is that price    increases when products are improved by innovation, and when other factors – principally  competition and the value of money – are constant. It took many years to enumerate them  and to discover and validate the underlying equations.   Technology Matters Chicago  Technology Matters Chicago  Peter Howells, Professor of Monetary Economics at the Bristol (U.K.) Business School, interviewed  Chris Farrell about the missing link. The following Q&As have been edited from the Royal Economic  Society Newsletter, Issue no. 142, July 2008 to explain its genesis