Developed by Paul A. David (Clio and the Economics of QWERTY, 1985), W. Brian Arthur (Competing Technologies, Increasing Returns, and Lock-In by Historical Events, 1989), and Douglass C. North (Institutions, Institutional Change and Economic Performance, 1990).
Traces how an early, partly accidental choice became locked in through network effects, learning, and switching costs, and estimates what it would take to break free.
When to reach for it
When an organization or market is stuck with an arrangement everyone agrees is worse, or a decision now may lock in a path for years.
How it runs
- Name the stuck state and the better alternative.
- Trace back to the early decision that fixed the course.
- Identify the locks: network effects, learning, expectations, and switching costs.
- Estimate how large a gain would justify switching.
- Look for events that could break the lock, such as new regulation.
- Decide to live with it, hasten the break, or route around it.
Where it sits in SOLVE eX
Go to the source
- Clio and the Economics of QWERTY, American Economic Review 75(2), Papers and Proceedings, 1985
- Competing Technologies, Increasing Returns, and Lock-In by Historical Events, Economic Journal 99(394), 1989
- Institutions, Institutional Change and Economic Performance, Cambridge University Press, 1990