The economics of path-dependence in industrial organization

Path-dependence defines the set of dynamic processes where small events have longlasting consequences that economic action at each moment can modify yet only to a limited extent, Path-dependence is analytically generated by the overlapping of irreversibility, indivisibility and structural actions of agents, It makes it possible to allow both for the effects of past behaviour of agents on the structure of the environment and the Lamarckian survival of agents by learning and adaptation to the character of the environment; hence it provides a framework to understand and to model the effects of historic time on the behaviour of agents which are able at each point in time to modify their evolution. (C) 1997 Elsevier Science B.V.