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Cliometrica

, Volume 1, Issue 2, pp 91–114 | Cite as

Path dependence: a foundational concept for historical social science

  • Paul A. DavidEmail author
Original Paper

Abstract

This introduction to the concept of path dependence, its pertinence for the development of historical social science, and its application in economic analysis and economic history, proceeds from intuitive general ideas about history and historicity in narratives. It provides precise definitions of what is meant by describing a dynamical process as being “historical.” Deterministic and stochastic formalizations of such dynamical systems are distinguished. The characterization of stochastic path dependent processes as “non-ergodic” is explained in non-mathematical language by reference to concepts in probability theory, and a variety of representations of such processes in formal models is surveyed (including the Polya urn-process, certain kinds of Markov chain models, branching processes, and reversible spin systems) to show that while all display path dependence, their properties in other respects are quite different. The diverse set of structural, micro-level conditions that can give rise to path dependence is examined, and a further distinction is drawn between the property of path dependence and the existence of so-called “QWERTY-effects”—characterized by decentralized competitive market failures and consequent “lock-in” to Pareto-inefficient equilibria. Concluding sections consider the implications of the existence of non-ergodic dynamics for the methods of economic policy analysis, and the nature of the guidance that can be obtained in regard to public policy affecting endogenous technological change and institutional evolution.

Keywords

Market Failure Path Dependence Homogeneous Markov Chain Counterfactual World Path Dependent Process 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Notes

Acknowledgments

The general shape of this paper took form as the Invited Lecture presented to the Symposium on Twenty years ‘QWERTY-effects’ and path dependence studies, which was convened at The State University—Higher School of Economics, on 13 May 2005 in Moscow, Russia. I am grateful to Nureev Rustem (SU-HSE) for that invitation, and for his role with Leonid Borodkin (Moscow State University) and other Symposium participants, including V. Polterovich (Russian Academy of Sciences), in making the entire occasion both memorably enlightening and enjoyable. [An account of the symposium is available at: http://www.hse.ru/temp/2005/05_13_simpo.shtml, for those who read Cyrillic. A subsequent presentation the paper to the First BETA-Workshop on Historical Economics, held on 20–21 May 2005 at the Université Louis Pasteur de Strasbourg, provided opportunities for conversations with Kristine Bruland, Claude Diebolt (the Workshop’s organizer), James Foreman-Peck, Patrick Llerena, Steve Redding, and others, that contributed further to improve the exposition.

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Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Department of EconomicsStanford UniversityStanfordUSA
  2. 2.Oxford Internet InstituteUniversity of OxfordOxfordUK

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