This project is funded as a Phase I award under the 1987 Small Business Innovation Research Program Solicitation. The purpose of this research is to begin initial development of new analytical tools which will be used to determine the range of technologies coexisting in each of the four-digit U.S. manufacturing industries and the effect on production costs as lower cost technologies replace more costly ones. The differences in costs associated with each of the technologies in an industry, and the sensitivity of each to changes in input prices, along with other information developed in the study will be useful per se and in predicting the pace at which investment will be undertaken in each industry. The effect of such investment on U.S. and foreign markets will also be evaluated. To accomplish these ends, the research will result in a set of microeconomic tools applicable at the individual industry level.