nucleation

LIT-1314: Competing Technologies, Increasing Returns, and Lock-In by Historical Events

1 min read

Properties5
StatusActive — read 2026-10-21 (NOTE-1052) through its precursor only, the 1983 IIASA working paper WP-83-90 ("On Competing Technologies and Historical Small Events: The Dynamics of Choice under Increasing Returns"), read in full from IIASA's repository; the 1989 article itself was not reached (Unpaywall and OpenAlex closed, no open PDF on Semantic Scholar, JSTOR paywalled). Worth reading for the model that makes lock-in analysable: increasing returns turn the adoption difference into a random walk with absorbing barriers, so one technology takes the market, which one is decided by the order of small events, and the outcome is neither predictable, flexible nor necessarily efficient (THEORY-863, re-derived). Read it knowing that the model is very special (two types, linear returns, no expectations, pricing or sponsors), that its historical examples are illustrations, and that the published version may differ from the precursor read here.
Version2
Tagssocial-science, complex-systems
Cited as “paper” byNOTE-1052 — Arthur — Competing technologies and historical small events (working paper)
Cited as “source” byTHEORY-863 — In Arthur's model of two agent types arriving in random order, each adopting whichever of two technologies pays it more, with returns linear in previous adoptions, increasing returns make the adoption difference a random walk with absorbing barriers: one technology takes the whole market with probability one, A with probability Δ_R/(Δ_R + Δ_S) where Δ_R and Δ_S are the gaps at which each type switches, the winner need not be the better technology, and once it has locked in no small change in returns alters later choices; with diminishing returns the barriers reflect and the shares go predictably to one half

Graph View

Arthur, W. B. (1989). Competing Technologies, Increasing Returns, and Lock-In by Historical Events. The Economic Journal 99(394): 116–131. doi:10.2307/2234208.

Read on 2026-10-21 (NOTE-1052) through its precursor, Arthur’s IIASA working paper WP-83-90 (1983), in full; the 1989 article was not reached. The model’s result is THEORY-863, Active.

Why this is here

A19 cited Arthur for amplification by positive feedback: “early contingencies can select durable technological advantages without an intrinsic superiority sufficient to explain the outcome.” That is the economic precedent for CLAIM-408, dynamics neutral as to identity that still stabilize one allocation, and for CASE-112. Beside it the record holds North (LIT-489, THEORY-429) on increasing returns to an institutional matrix, which A19 did not use.

Backlinks