Abstract: When every profit unit in the innovation system seeks the benefit of its own, the profit maximization behavior will lead to the failure of innovation and the delay of technology spread. In fact, the innovation delay and the failure of technology commercialization mean that the innovator has been beaten at the back line in the industry of network externalities. The result of the competition between the developing countries and the developed countries are advantageous to the latter, if the market has been adjusted only by the invisible hand. Therefore the third party should enter into the innovation system to prevent this situation from remaining long, that is, the developing countries have to offer their national markets to the developed countries and meanwhile to buy the technologies from them.

Key words: systematic innovation, network externality, market failure, the third party