The rate equations for a microcavity semiconductor laser are solved and the steady-state behavior of the laser and some of its dynamic characteristics are investigated. It is shown that by manipulating the mode density and the spontaneous decay rates of the cavity modes, the threshold gain can be decreased and the modulation speed can be improved. However, in order to fully exploit the possibilities which the modification of the spontaneous decay opens up, the active material volume in the cavity must be smaller than a certain value. Threshold current using different definitions, population inversion factor, L-I curves, linewidth, and modulation response are discussed.< <ETX xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">></ETX>