Competing Technologies, Increasing Returns, and Lock-In by Historical Events Export

@article{Arthur89, abstract = {This paper explores the dynamics of allocation under increasing returns, within a model where agents choose between technologies competing for adoption and where each technology improves as it gains in adoption. It shows that the economy, over time, can become locked-in by "random" historical events to a technological path that is not necessarily efficient, not possible to predict from usual knowledge of supply and demand functions, and not easy to change by standard tax or subsidy policies. Rational expectations about future agents' technology choices can exacerbate this lock-in tendency. The paper contrasts this increasing returns case with the diminishing and constant returns cases; provides a framework for a general family of competing-technology problems; and discusses implications for economic history, policy, and prediction.}, author = {Arthur, W. B.}, citeulike-article-id = {1914946}, citeulike-linkout-0 = {http://dx.doi.org/10.2307/2234208}, citeulike-linkout-1 = {http://www.jstor.org/stable/2234208}, doi = {10.2307/2234208}, journal = {The Economic Journal}, keywords = {behavioral-convention, economy}, number = {394}, pages = {116--131}, posted-at = {2009-04-21 15:52:26}, priority = {2}, title = {Competing Technologies, Increasing Returns, and Lock-In by Historical Events}, url = {http://dx.doi.org/10.2307/2234208}, volume = {99}, year = {1989} }

TY - JOUR ID - Arthur89 L3 - citeulike-article-id:1914946 N2 - This paper explores the dynamics of allocation under increasing returns, within a model where agents choose between technologies competing for adoption and where each technology improves as it gains in adoption. It shows that the economy, over time, can become locked-in by "random" historical events to a technological path that is not necessarily efficient, not possible to predict from usual knowledge of supply and demand functions, and not easy to change by standard tax or subsidy policies. Rational expectations about future agents' technology choices can exacerbate this lock-in tendency. The paper contrasts this increasing returns case with the diminishing and constant returns cases; provides a framework for a general family of competing-technology problems; and discusses implications for economic history, policy, and prediction. IS - 394 JF - The Economic Journal EP - 131 TI - Competing Technologies, Increasing Returns, and Lock-In by Historical Events VL - 99 SP - 116 KW - behavioral-convention KW - economy AU - Arthur, WB PY - 1989/// UR - http://dx.doi.org/10.2307/2234208 ER -