3. PATH DEPENDENCE, NETWORK FORM, AND TECHNOLOGICAL CHANGE
Douglas J. Puffert · Stanford University Press eBooks · 2003
A process of economic allocation is called path dependent when the sequence of allocations depends not only on fundamental, a priori determinants—typically listed as technology, factor endowments, preferences, and institutions—but also on particular contingent events. Instead of converging to a determinate, predictable, unique equilibrium, such processes have multiple potential equilibria, and which one is selected depends on the specific history of the process. Positive feedbacks among agents ’ choices lend persistence and, indeed, increasing impact to particular early choices and other events. Under what conditions is an allocation process path dependent? Here I synthesize and extend various partial answers by focusing on two issues: first, the form or structure of the explicit or “virtual ” networks that characterize the interdependency of agents ’ choices and, second, the specific characteristics of technology and technological change, which in various ways affect the relative attractiveness of different potential equilibria and the permanence of “lock-in ” to a specific path of allocation. My emphasis here, like that of most of the literature, is on path dependence in technology—specifically, in the selection of specific techniques. After developing this theme, I also briefly give attention to what David (1993) has called the homomorphism of