Path Dependency

Definition: Path dependency is the view that technological change in a society depends quantitatively and/or qualitatively on its own past. "A variety of mechanisms for the autocorrelation can be proposed. One of them, due to David (1975) is that technological change tends to be 'local,' that is, learning occurs primarily around techniques in use, and thus more advanced economies will learn more about advanced techniques and stay at the cutting edge of progress." (Mokyr, 1990, p 163)

A noted example of technological path dependence is the QWERTY keyboard, which would not be in use today except that it happened to be chosen a hundred years ago. A special interest in the research literature was taken in the question of whether technological path dependence has been observed to lead to noticeably Pareto-inferior outcomes later. Liebowitz and Margolis in a series of papers (e.g. in the JEP) have made the case that it has not -- that is that the QWERTY keyboard is not especially inferior to alternatives in productivity, and that the VHS videotapes were not especially inferior to Beta videotapes at the time consumers chose between them.

(Econterms)

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