INCREASING RETURNS AND LOCK-IN BY HISTORICAL EVENTS

@inproceedings{Arthur1989INCREASINGRA,
  title={INCREASING RETURNS AND LOCK-IN BY HISTORICAL EVENTS},
  author={W. Brian Arthur},
  year={1989}
}
This paper examines 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… 

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