Operator product expansion and factorization in the $H_3^+$-WZNW model

Precise descriptions are given for the operator product expansion of generic primary fields as well as the factorization of four point functions as sum over intermediate states. The conjecture underlying the recent derivation of the space-time current algebra for string theory on $ADS_3$ by Kutasov and Seiberg is thereby verified. The roles of microscopic and macroscopic states are further clarified. The present work provides the conformal field theory prerequisites for a future study of factorization of amplitudes for string theory on $ADS_3$ as well as operator product expansion in the corresponding conformal field theory on the boundary.