Abstract: The paper uses the agent-based modeling method to build up a micro-founded industry evolution model with endogenous innovation mechanism and studies the enterprise technology innovation behaviors' impacts on the optimization of the industrial structure based on the theory of evolution of industrial structure and the innovation theory. The study finds out that: (1) Process innovation boosts the industry structure rationality. With bigger size, both product innovation and process innovation facilitate the rationality of industry structure; and (2) As to the upgrading of industry structure, process innovation is more beneficial to the increasing of non-agriculture share of GDP(NAGR), whereas product innovation promote the decreasing of Hoffmann Coefficient. With the scale rising, both process innovation and product innovation lead to the increasing of NAGR. At the same time the rising of product innovation scale promote the declining of Hoffmann Coefficient.

Key words: technology innovation, industry structure optimization, micro-founded, input-output