“Reviewing Path Dependence Theory in Economics: Micro–Foundations of Endogenous Change Processes”

Gigante, Anna Azzurra (2016): “Reviewing Path Dependence Theory in Economics: Micro–Foundations of Endogenous Change Processes”.

Abstract

This paper proposes a critical review of some of the main applications of path-dependence in economic theory. In particular, it calls attention on those theories clarifying the micro-foundations of path-dependent processes in economics. In the field of innovation, path-dependence shows the endogenous character of technological change, revealing the complex interplay among firm’s structural specificities, irreversibility, creativity, localized learning, externalities, feedbacks and contingent disturbing factors. In cognitive and institutional economics, the path-dependent character of learning processes, shown by cognitive and neurobiological studies, suggests interesting explanations for economic and institutional inefficiency persistence and, in general, for institutional genesis and evolution processes. Micro-foundations of economic path-dependence offer new opportunities for further extending theoretical and empirical economic research. For instance, they could contribute to extend economic self-organization approach, which has focused on the non-linear character of economic dynamic processes and has described economic systems as dissipative and entropic structures. In this sense, path-dependence represents a fertile tool for further clarifying economic and institutional dynamics and a precious opportunity of interdisciplinary research.

• Item Type: MPRA Paper
• Language: English
• Keywords: path-dependence; endogenous change; non-ergodic process; knowledge production; innovation economics; cognitive economics; institutions; neural structures; self-organization; dissipative systems; entropy law
• Subjects: A - General Economics and Teaching > A1 - General Economics > A12 - Relation of Economics to Other Disciplines; B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B25 - Historical ; Institutional ; Evolutionary ; Austrian; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

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