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Path dependence

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161: 147: 44:, referring to processes where past events or decisions constrain later events or decisions. It can be used to refer to outcomes at a single point in time or to long-run equilibria of a process. Path dependence has been used to describe institutions, technical standards, patterns of economic or social development, organizational behavior, and more. 627:
path dependence within political science, draws partly on ideas from economics. Herman Schwartz has questioned those efforts, arguing that forces analogous to those identified in the economic literature are not pervasive in the political realm, where the strategic exercise of power gives rise to, and
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Kathleen Thelen has criticized the application of QWERTY keyboard-style mechanisms to politics. She argues that such applications to politics are both too contingent and too deterministic. Too contingent in the sense that the initial choice is open and flukey, and too deterministic in the sense that
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In common usage, the phrase can imply two types of claims. The first is the broad concept that "history matters," often articulated to challenge explanations that pay insufficient attention to historical factors. This claim can be formulated simply as "the future development of an economic system is
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with skills in that business, which draws in more businesses seeking experienced employees. There may have been no reason to prefer one place to another before the industry developed, but as it concentrates geographically, participants elsewhere are at a disadvantage, and will tend to move into the
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affected by the path it has traced out in the past" or "particular events in the past can have crucial effects in the future." The second is a more specific claim about how past events or decisions affect future events or decisions in significant or disproportionate ways, through mechanisms such as
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which captures how initial environmental conditions leave a persistent mark (or imprint) on organizations and organizational collectives (such as industries and communities), thus continuing to shape organizational behaviours and outcomes in the long run, even as external environmental conditions
276:, but rather the nature of any equilibrium achieved depends partly on the process of getting there. Therefore, the outcome of a path-dependent process will often not converge towards a unique equilibrium, but will instead reach one of several equilibria (sometimes known as 196:
The standard gauge of railway tracks is another example of path dependence which explains how a seemingly insignificant event or circumstance can change the choice of technology over the long run despite contemporary knowhow showing such a choice to be inefficient.
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of neoclassical economics. Only "third-degree" path dependence—where switching gains are high, but transition is impractical—involves such a challenge. They argue that such situations should be rare for theoretical reasons, and that no real-world cases of
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path dependence can be weak (the efficiency of the chosen path is tied with some alternatives), semi-strong, (the chosen path is not the best but not worth fixing, or strong (the chosen path is highly inefficient, but we are unable to correct
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path dependence can be weak (the efficiency of the chosen path is tied with some alternatives), semi-strong, (the chosen path is not the best but not worth fixing, or strong (the chosen path is highly inefficient, but we are unable to correct
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In socioeconomic systems, commercial fisheries' harvest rates and conservation consequences are found to be path dependent as predicted by the interaction between slow institutional adaptation, fast ecological dynamics, and diminishing
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The QWERTY keyboard is a prominent example of path dependence due to the widespread emergence and persistence of the QWERTY keyboard. QWERTY has persisted over time despite more efficient keyboard arrangements being developed –
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indicate path dependence: customers' needs in the present market often include the ability to read data or run programs from past generations of products. Thus, for instance, a customer may need not merely the best available
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can lead to a permanently higher unemployment rate because of the skills loss (or skill obsolescence) by the unemployed, along with a deterioration of work attitudes. In other words, cyclical unemployment may generate
287:, which in its simplest form assumed that only a single outcome could possibly be reached, regardless of initial conditions or transitory events. With path dependence, both the starting point and 'accidental' events ( 222:. His experience with primitive coal tramways resulted in this gauge width being copied by the Liverpool and Manchester Railway, then the rest of Great Britain, and finally by railroads in Europe and North America. 1844:
In particular, we suggest moving away from historical case studies of supposedly path-dependent processes to focus on more controlled research designs[,] such as simulations, experiments, and counterfactual
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manufacturers. Some of the factories that closed as a result, could later have been operated at a (cash-flow) profit after dollar depreciation, but reopening would have been too expensive. This is an example of
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Sony, the original developer of Betamax, did not let pornography companies license their technology for mass production, which meant that nearly all pornographic motion pictures released on video used VHS
716:: mutations occurring in the past have had long-term effects on current life forms, some of which may no longer be adaptive to current conditions. For instance, there is a controversy about whether the 513:
Recent methodological work in comparative politics and sociology has adapted the concept of path dependence into analyses of political and social phenomena. Path dependence has primarily been used in
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is an example of this phenomenon, has been re-asserted, questioned, and continues to be argued. Economic debate continues on the significance of path dependence in determining how standards form.
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There are tradeoffs involved in the choice of rail gauge between the cost of constructing a line (which rises with wider gauges) and various performance metrics, including maximum speed, low
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Path dependence theory was originally developed by economists to explain technology adoption processes and industry evolution. The theoretical ideas have had a strong influence on
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analyzed how the growth of a firm both organically and through acquisition is strongly influenced by the experience of its managers and the history of the firm's development.
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locked-in inefficiencies exist. Vergne and Durand qualify this critique by specifying the conditions under which path dependence theory can be tested empirically.
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is partly determined by past experience with inflation, since experience determines expected inflation and this is a major determinant of realized inflation.
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layout in typewriters still used in computer keyboards). He called this "path dependence", and said that inferior standards can persist simply because of the
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from damage if the word needed to be moved around within or between lines. This would be done even if the period did not belong to the text being quoted.
1814:"The Missing Link Between the Theory and Empirics of Path Dependence: Conceptual Clarification, Testability Issue, and Methodological Implications" 684:, for example, some customs persist, although the reason for their existence no longer applies; for example, the placement of the period inside a 569: 1478:
Paul David and Brian Arthur published several papers that are now regarded as the foundation of path dependency (David 1985; Arthur 1989, 1990).
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contribute to lock-in, and more subtly, to design compromises for independently developed products, if they attempt to be compatible. Also see
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The other path-dependent process deals with reactive sequences where a primary event sets off a temporally-linked and causally-tight
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as generally is the case for branching processes [in Path dependence, its critics and the quest for 'historical economics']
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Most generally, path dependence means that where we go next depends not only on where we are now, but also upon where we have been.
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Hargreaves Heap, Shawn (1980), "Choosing the Wrong 'Natural' Rate: Accelerating Inflation or Decelerating Employment and Growth?"
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There are many models and empirical cases where economic processes do not progress steadily toward some pre-determined and unique
2513: 219: 2241: 514: 261:. A common expression of the concept is the claim that predictable amplifications of small differences are a disproportionate 1111: 859: 749: 1176:
It was the inferior playing time that led to the demise of the Betamax, not the fact that it was first or second or third.
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is an example of this. However, there is still debate about the validity of this being a true example of path dependence.
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Our reading of the evidence is that there are as yet no proven examples of third degree path dependence in markets.
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chain of events that is nearly uninterruptible. These reactive sequences have been used to link such things as the
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Stack, Martin; Gartland, Myles (2003). "Path Creation, Path Dependency, and Alternative Theories of the Firm".
912:"Migration to Open-Standard Interorganizational Systems: Network Effects, Switching Costs, and Path Dependency" 777: 549:
development and consolidation that is difficult to reverse. As in economics, the generic drivers are: lock-in,
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This article is about path dependence in economics and social sciences. For a similar topic in physics, see
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Tracks across continents, paths through history: the economic dynamics of standardization in railway gauge
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Shaping the Political Arena: Critical Junctures, the Labor Movement, and Regime Dynamics in Latin America
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once the initial choice is made, an unavoidable path inevitably forms from which there is no return.
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Bryant, Robert L. (2006). "Geometry of manifolds with special holonomy: '100 years of holonomy'".
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that "evolves as a consequence (function of) the process's own history". This is also known as a
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Encyclopedia of Law and Economics, Volume I. The History and Methodology of Law and Economics
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Liebowitz, S.; Margolis, S. (September 2000). Bouckaert, Boudewijn; De Geest, Gerrit (eds.).
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Encyclopedia of Law and Economics, Volume I. The History and Methodology of Law and Economics
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Liebowitz, S.; Margolis, S. (September 2000). Bouckaert, Boudewijn; De Geest, Gerrit (eds.).
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Path dependence may arise or be hindered by a number of important factors, these may include
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The critical juncture framework has been used to explain the development and persistence of
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Global Networks and Local Linkages: The Paradox of Cluster Development in an Open Economy
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between countries, among other things. Scholars such as Kathleen Thelen caution that the
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Pierson, Paul (2000). "Increasing Returns, Path Dependence, and the Study of Politics".
2392: 2340: 2242:"Conceptualizing Continuity and Change: The Composite-Standard Model of Path Dependence" 2109: 2033:
Marquis, Christopher; Tilcsik, András (2013). "Imprinting: Toward A Multilevel Theory".
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of later circumstances, and, in the "strong" form, that this historical hang-over is
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Tekwa, Edward W.; Fenichel, Eli P.; Levin, Simon A.; Pinsky, Malin L. (2019-01-08).
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This dynamic vision of economic evolution is very different from the tradition of
160: 2479: 2467:"Path Dependence in Spatial Networks: The Standardization of Railway Track Gauge" 1288:"Path Dependence in Spatial Networks: The Standardization of Railway Track Gauge" 792: 444: 266: 2169: 879: 700:.) Placing the full-height quotation mark on the outside protected the smaller 17: 2449:
Politics in Time: Politics in Time: History, Institutions, and Social Analysis
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Liebowitz, S. J.; Margolis, Stephen E. (April 1990). "The Fable of the Keys".
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of path dependence; some do not imply inefficiencies and do not challenge the
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events that disrupted the ongoing course, with irreversible consequences.
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Liebowitz, S. J.; Margolis, S. E. (April 1990). "The Fable of the Keys".
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Actions in the present are dependent on previous decisions or experiences
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Zhu, Kevin; Kraemer, Kenneth L.; Gurbaxani, Vijay; Xu, Sean Xin (2006).
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have noted that similar businesses tend to congregate geographically (
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to buy VHS players and rent more VHS tapes, until there was complete
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we conclude that QWERTY is about as good a design as any alternative
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in path-dependent frameworks is subject to constant disruption from
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of switching to VHS-production because they expected it to win the
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Mahoney, James (2000). "Path Dependence in Historical Sociology".
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Evolution and Path Dependence in Economic Ideas: Past and Present
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Evolution and path dependence in economic ideas: past and present
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Economics and evolution : bringing life back into economics
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differs from the prediction of a "natural" unemployment rate or
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observed more VHS rentals and stocked up on VHS tapes, leading
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150 years of mathematics at Washington University in St. Louis
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framework, most notably utilized by Ruth and David Collier in
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below the cost of production in many (previously successful)
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is considered by some to be path-dependent and historically
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More than half the world's railway gauges are 4 feet
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Technically, a path-dependent stochastic process has an
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that is first-to-market can become entrenched (like the
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in which the states depend on the physical paths taken.
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around sellers, and related businesses frequently form
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Increasing Returns and Path Dependence in the Economy.
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is a key example of path dependence. Three mechanisms
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Egidi, Massimo; Narduzzo, Alessandro (October 1997).
1994:"Historical Institutionalism in Comparative Politics" 1691:
Jen Nelles, Allison Bramwell and David Wolfe (2005).
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can occur (through rising local costs). Buyers often
1129:"Betamax Didn't Lose To VHS Because Of Adult Films" 673:A general type of path dependence is a typological 1153: 303:In economic development, it is said (initially by 1654:"Agglomeration Effects and Financial Performance" 2489:, unpublished website, with extensive references 2064:International Journal of Industrial Organization 1563:At Last, a Remedy for Chronic QWERTY-skepticism! 2391:Stephen E. Margolis and S.J. Liebowitz (2000), 2352:, Edward Elgar Publishing, Cheltenham, England. 2098:Proceedings of the National Academy of Sciences 840:Mahoney, James; Schensul, Daniel (2006-03-16). 561:(which creates forces sustaining the decision). 517:analyses of the development and persistence of 846:. Oxford University Press. pp. 454–471. 476:Conditions which give rise to path dependence 8: 1787:4. Evidence for Third-Degree Path Dependence 965:Baláž, Vladimir; Williams, Allan M. (2007). 1106:. Ann Arbor: University of Michigan Press. 2348:, in P. Garrouste and S. Ioannides (eds), 545:choices that set a specific trajectory of 418:. This structural hysteresis model of the 2500:, 47(4):736–59, with extensive references 2399:An evolutionary theory of economic change 2310:. Princeton: Princeton University Press. 2260: 2168: 2135: 2117: 2009: 1829: 1744:. Cheltenham: Edward Elgar. p. 985. 1628: 1618: 1413:. Cheltenham: Edward Elgar. p. 985. 1391:An evolutionary theory of economic change 1074:Liebowitz, S.; Margolis, Stephen (2000). 1034: 982: 374:appreciated, lowering the world price of 1599:D'Souza, Raissa M.; et al. (2007). 134:An alternative analysis is that VHS was 2393:"Path Dependence, Lock-In, and History" 2359:90(359) (Sept): 611–20 (ISSN 0013-0133) 1325:Puffert, Douglas J. (December 2000). . 852:10.1093/oxfordhb/9780199270439.003.0024 823: 570:assassination of Martin Luther King Jr. 214: inches (143.5 cm), known as 2487:"QWERTY, Lock-in, and Path Dependence" 2411:Quarterly Journal of Political Science 1913:Quarterly Journal of Political Science 1783:Stephen E. Margolis; S. J. Liebowitz. 1560:David, Paul A. (5–12 September 1999). 1371: 1360: 843:Historical Context and Path Dependence 493:Dynamic increasing returns to adoption 2456:"Path Dependence in Economic History" 1186: 1184: 1015:The American Political Science Review 7: 2492:Vergne, J. P. and R. Durand (2010), 2460:Handbuch zur evolutorischen Ă–konomik 2435:The Theory of the Growth of the Firm 1652:Jennen, M.; Verwijmeren, P. (2009). 1004: 1002: 905: 903: 873: 871: 835: 833: 831: 829: 827: 466:The Theory of the Growth of the Firm 2408:(January 2006). "Path dependence". 2226:Social Choice and Individual Values 1286:Puffert, Douglas J. (1 July 2002). 434:Liebowitz and Margolis distinguish 2223:Arrow, Kenneth J. (1963), 2nd ed. 1998:Annual Review of Political Science 1812:Vergne, J. P.; Durand, R. (2010). 1193:"Clio and the Economics of QWERTY" 783:Imprinting (organizational theory) 345:increasing its relative efficiency 338:); opening near similar companies 25: 2442:American Political Science Review 2397:Nelson, R. and S. Winter (1982), 1102:Hodgson, Geoffrey Martin (1993). 1076:Encyclopedia of Law and Economics 1831:10.1111/j.1467-6486.2009.00913.x 1292:Explorations in Economic History 1235:The Journal of Law and Economics 984:10.1111/j.1468-2435.2007.00403.x 656:has been observed in behavioral 220:Liverpool and Manchester Railway 159: 145: 136:better-adapted to market demands 2249:Journal of Theoretical Politics 2011:10.1146/annurev.polisci.2.1.369 1577:Puffert, Douglas (2008-02-10). 1327:The Journal of Economic History 1156:Re-thinking the Network Economy 572:with welfare expansion, or the 484:Durability of capital equipment 65:Videocassette recording systems 2475:, University of Chicago Press. 1466:10.1080/00213624.2003.11506597 759:In physics and mathematics, a 750:embrace, extend and extinguish 355:in the idealized case, though 75:independent of product quality 56:effects, or other mechanisms. 1: 2498:Journal of Management Studies 2451:, Princeton University Press. 2236:University of Michigan Press. 2076:10.1016/S0167-7187(97)00007-6 1904:Page, Scott E. (2006-01-26). 1818:Journal of Management Studies 1389:Nelson, R; Winter, S (1982). 2454:Puffert, Douglas J. (1999), 2332:David, Paul A. (June 2000). 2214:Resources in other libraries 2036:Academy of Management Annals 1861:. Edward Elgar. p. 19. 1516:Journal of Law and Economics 1200:The American Economic Review 888:Economic History Association 580:with the development of the 370:In the 1980s, the US dollar 2401:, Harvard University Press. 1393:. Harvard University Press. 744:files. Such limitations in 720:is a leftover trait or not. 509:Historical institutionalism 233:). While the attempts with 231:double-stack rail transport 2550: 1606:Proc. Natl. Acad. Sci. USA 1454:Journal of Economic Issues 813:Tyranny of small decisions 628:transforms, institutions. 623:'s influential attempt to 506: 487:Technical interrelatedness 405:A transitory high rate of 229:(desirable, especially in 29: 2232:Arthur, W. Brian (1994), 2209:Resources in your library 1992:Thelen, Kathleen (1999). 1339:10.1017/S0022050700026322 1078:. E. Elgar. p. 981. 592:, labor incorporation in 319:they have built up. That 32:Path dependence (physics) 2433:Penrose, E. T., (1959), 2271:10.1177/0951629807071016 1951:European Policy Analysis 1670:10.1177/0042098010363495 1152:Liebowitz, Stan (2002). 778:Critical juncture theory 596:, and the variations in 430:Types of path dependence 2514:Competition (economics) 2485:Shalizi, Cosma (2001), 2377:10.1023/A:1007113830879 2240:Boas, Taylor C (2007). 2119:10.1073/pnas.1806852116 1620:10.1073/pnas.0606779104 1191:David, Paul A. (1985). 971:International Migration 652:The path dependence of 606:institutional evolution 452:asymptotic distribution 416:structural unemployment 394:If the economy follows 391:, and irreversibility. 285:neo-classical economics 2300:Collier, Ruth Berins; 2170:10.1090/conm/395/07414 1304:10.1006/exeh.2002.0786 1127:M.Admin (2014-03-05). 1009:Pierson, Paul (2000). 648:Individuals and groups 602:historical determinism 515:comparative-historical 351:follows a statistical 259:evolutionary economics 1495:"The Curse of QWERTY" 688:in U.S. spelling. In 660:with individuals and 637:organizational theory 574:Industrial Revolution 396:adaptive expectations 2424:10.1561/100.00000006 1945:Hogan, John (2019). 1925:10.1561/100.00000006 1857:David, Paul (2005). 1160:. New York. p.  788:Innovation butterfly 761:non-holonomic system 625:rigorously formalize 598:economic development 299:Economic development 192:Railway track gauges 71:videotape format war 40:is a concept in the 2110:2019PNAS..116..689T 1891:eh.net Encyclopedia 440:policy implications 118:A VCR manufacturer 60:Commercial examples 2478:Schwartz, Herman. 2437:, New York: Wiley. 2365:Theory and Society 1885:Puffert, Douglas. 878:Puffert, Douglas. 559:self-reinforcement 555:increasing returns 533:. In the critical 490:Increasing returns 459:stochastic process 389:switching barriers 88:from a negligible 82:achieved dominance 77:could explain how 50:increasing returns 2195:Library resources 1963:10.1002/epa2.1057 1906:"Path Dependence" 1887:"Path Dependence" 1868:978-1-84064-081-6 1785:"Path Dependence 1751:978-1-85898-984-6 1707:978-1-55339-047-3 1664:(12): 2683–2703. 1613:(15): 6112–6117. 1579:"Path Dependence" 1500:Discover Magazine 1420:978-1-85898-984-6 1269:"The QWERTY myth" 1171:978-0-8144-0649-6 1085:978-1-85898-984-6 880:"Path Dependence" 654:emergent strategy 551:positive feedback 541:conditions allow 531:political science 527:critical juncture 365:business clusters 357:negative feedback 321:QWERTY vs. Dvorak 227:center of gravity 186:QWERTY vs. Dvorak 54:positive feedback 16:(Redirected from 2541: 2427: 2388: 2357:Economic Journal 2347: 2345: 2339:. Archived from 2338: 2328: 2326: 2324: 2296: 2294: 2293: 2287: 2281:. 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1879: 1869: 1856: 1855: 1851: 1845:investigation." 1811: 1810: 1806: 1793: 1791: 1782: 1781: 1777: 1764: 1762: 1758: 1752: 1741: 1734: 1733: 1729: 1720: 1718: 1714: 1708: 1697: 1690: 1689: 1685: 1680:. ssrn 1009226. 1651: 1650: 1646: 1598: 1597: 1593: 1583: 1581: 1576: 1575: 1571: 1559: 1558: 1554: 1513: 1512: 1508: 1489: 1488: 1484: 1451: 1450: 1446: 1433: 1431: 1427: 1421: 1410: 1403: 1402: 1398: 1388: 1387: 1383: 1369: 1359: 1324: 1323: 1319: 1285: 1284: 1280: 1267: 1266: 1262: 1232: 1231: 1227: 1195: 1190: 1189: 1182: 1172: 1151: 1150: 1146: 1137: 1135: 1126: 1125: 1121: 1114: 1101: 1100: 1096: 1086: 1073: 1072: 1068: 1027:10.2307/2586011 1008: 1007: 1000: 964: 963: 959: 909: 908: 901: 892: 890: 877: 876: 869: 862: 839: 838: 825: 821: 774: 765:physical system 702:cast metal sort 670: 650: 618: 511: 505: 500: 498:Social sciences 478: 432: 328:Alfred Marshall 301: 255: 210: 206: 203: 201: 194: 181: 179:QWERTY keyboard 176: 175: 174: 173: 169: 168: 167: 166:Dvorak keyboard 164: 155: 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1021:(2): 251–267. 998: 957: 899: 867: 860: 822: 820: 817: 816: 815: 810: 808:Ratchet effect 805: 800: 798:Network effect 795: 790: 785: 780: 773: 770: 769: 768: 757: 753: 742:Microsoft Word 738:word processor 733:legacy systems 721: 707: 706: 705: 669: 668:Other examples 666: 649: 646: 617: 614: 590:welfare states 586: 585: 562: 504: 501: 499: 496: 495: 494: 491: 488: 485: 477: 474: 431: 428: 376:tradable goods 349:network effect 300: 297: 254: 251: 216:standard gauge 193: 190: 180: 177: 171: 170: 165: 158: 157: 156: 151: 144: 143: 142: 141: 140: 132: 131: 127: 116: 113:vendor lock-in 98:network effect 90:early adoption 66: 63: 61: 58: 26: 24: 14: 13: 10: 9: 6: 4: 3: 2: 2546: 2535: 2532: 2530: 2527: 2525: 2524:Markov models 2522: 2520: 2517: 2515: 2512: 2511: 2509: 2499: 2495: 2491: 2488: 2484: 2481: 2477: 2474: 2470: 2468: 2464: 2461: 2457: 2453: 2450: 2446: 2443: 2439: 2436: 2432: 2430: 2425: 2421: 2417: 2413: 2412: 2407: 2403: 2400: 2396: 2394: 2390: 2386: 2382: 2378: 2374: 2370: 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Index

Path dependency
Path dependence (physics)
social sciences
increasing returns
positive feedback
videotape format war
VHS
achieved dominance
Betamax
early adoption
network effect
videocassette
rental stores
renters
vendor lock-in
bandwagon effect
better-adapted to market demands


QWERTY vs. Dvorak
standard gauge
Liverpool and Manchester Railway
center of gravity
double-stack rail transport
Brunel gauge
Iberian gauge
Russian gauge
Indian gauge
evolutionary economics
cause

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