More Evidence Against the QWERTY Effect

19 January 2009 at 4:02 pm 1 comment

| Peter Klein |

Via MR, an experimental study on path dependence finds that subjects do not get stuck using second-best technologies, even in the presence of network effects:

In this paper, we offer new evidence regarding the economic importance of QWERTY type outcomes. We use laboratory experiments to study platform competition. Experiments have several advantages in studying platform competition: the identity of the inferior platform is clearly defined; the degree to which a platform has a “head start” is controlled; and the “life cycle” of platform competition is reproducible. So far as we are aware, we are the first to study QWERTY in the lab.

We can easily summarize our results: Somehow, the market always manages to solve the QWERTY problem. In sixty iterations of dynamic platform competition, our subjects never got stuck on the inferior platform — even when it enjoyed a substantial first-mover advantage.

For more on path dependence, network effects, and QWERTY see thisthis, and this. The more I learn about so-called QWERTY effects the more I’m convinced that they have no economic significance (and even less policy signficance).

Entry filed under: - Klein -, Evolutionary Economics, Institutions.

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1 Comment Add your own

  • 1. Bob Layson  |  20 January 2009 at 8:35 am

    As regards policy implications, the first thing is to have no policy and the second thing is to continue with the first. A tax funded and force of ”law” wielding state ad hoc intervention committee would be a manifest lock-in and path to, depend upon it, lesser growth. Growth that would in most cases out-flank or displace some apparently irremovable incumbent.

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