In this paper we examine path dependence and illustrate three different forms of the term, each having a different implication regarding market errors and lockin. Since their first emergence in the work of paul david thirty years ago, the dual issues of path dependence and lockin have become critically important subjects in the fields of economics, sociology, and business strategy. Path dependence is the application to econom ic systems of an. Analogously, a key finding of path dependence is a property of lockin by historical events to echo the title of brian arthurs influential paper, especially where. The lockin in path dependence is a lockin to something bad, or at least a lockout of. The path dependence literature comes to us accompanied and motivated by a mathematical literature of nonlinear dynamic models, known as chaos or complexity models, for which a key. Path dependence, its critics, and the quest for historical. Technological and institutional lockin as a barrier to sustainable innovation. Technological and institutional lockin imperial college london.
Path dependence and lockin edward elgar publishing. Since the notion of path dependence entered the economics lexicon in the. The example illustrates undesirable lockin because a is not the better choice if the eventual number of adopters is large. Path dependence, lockin, and history article pdf available in journal of law economics and organization 111. In particular, small historical accidents can provide a given.
It attempts to explain exactly how history matters through studies of the means by. Where information is imperfect, a second possibility arises. This type of backloading support has a long history the most famous. The conceptual model is then used to investigate a german book club that has become pathdependent and, finally, lockedin. Path dependence in analytical narrative history although the term can be defined precisely, and the concept of path dependence is amenable to fu rther elaboration with the aid of tools from. The feedback mechanisms that lock in the system under investigation along a. The literature of path dependence may be understood to argue that these lockins and errors occur, even in a world characterized by voluntary decisions and individually maximizing behavior. Lockin to a would exemplify thirddegree path dependence if the information in the table were known. Path dependence is the tendency of institutions or technologies to develop in.
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