Editing Path dependence (section)

=== Types of path dependence ===
Liebowitz and Margolis distinguish ''types'' of path dependence;<ref name="LMTypes">{{cite book |last1= Liebowitz |first1= S. |last2= Margolis |first2= S. |editor1-first= Boudewijn |editor1-last= Bouckaert |editor2-first= Gerrit |editor2-last= De Geest |title= Encyclopedia of Law and Economics, Volume I. The History and Methodology of Law and Economics |url= http://encyclo.findlaw.com/0770book.pdf |access-date= 2010-05-20 |date= September 2000 |publisher= Edward Elgar |location= Cheltenham |isbn= 978-1-85898-984-6 |page= 985 |quote= path dependence can be weak (the efficiency of the chosen path is tied with some alternatives), semi-strong, (the chosen path is not the best but not worth fixing, or strong (the chosen path is highly inefficient, but we are unable to correct it). |archive-date= 2010-12-06 |archive-url= https://web.archive.org/web/20101206033616/http://encyclo.findlaw.com/0770book.pdf |url-status= dead }}</ref> some do not imply inefficiencies and do not challenge the [[Normative economics|policy implications]] of neoclassical economics. Only "third-degree" path dependence—where switching gains are high, but transition is impractical—involves such a challenge. They argue that such situations should be rare for theoretical reasons, and that no real-world cases of [[Free market|private]] locked-in inefficiencies exist.<ref>{{cite web |url= http://www.utdallas.edu/~liebowit/palgrave/palpd.html |title=Path Dependence '''4. Evidence for Third-Degree Path Dependence''' |author=Stephen E. Margolis |author2=S. J. Liebowitz |access-date=20 May 2010 |quote=Our reading of the evidence is that there are as yet no proven examples of third degree path dependence in markets.}}</ref> Vergne and Durand qualify this critique by specifying the conditions under which path dependence theory can be tested empirically.<ref>{{Cite journal | last1 = Vergne | first1 = J. P. | last2 = Durand | first2 = R. | doi = 10.1111/j.1467-6486.2009.00913.x | title = The Missing Link Between the Theory and Empirics of Path Dependence: Conceptual Clarification, Testability Issue, and Methodological Implications | journal = Journal of Management Studies | volume = 47 | issue = 4 | pages = 736 | year = 2010 | s2cid = 107050516 |quote=In particular, we suggest moving away from historical case studies of supposedly path-dependent processes to focus on more controlled research designs&#91;,&#93; such as simulations, experiments, and counterfactual investigation."| doi-access = free }}</ref>

Technically, a path-dependent stochastic process has an [[asymptotic distribution]] that "evolves as a consequence (function of) the process's own history".<ref>{{cite book |title=Evolution and path dependence in economic ideas: past and present |first=Paul |last=David |year=2005 |publisher=Edward Elgar |isbn=978-1-84064-081-6 |page=19 |quote=as generally is the case for branching processes &#91;in Path dependence, its critics and the quest for 'historical economics'&#93;}}</ref> This is also known as a [[Ergodic (adjective)|non-ergodic]] [[stochastic process]].

In ''The Theory of the Growth of the Firm'' (1959), [[Edith Penrose]] analyzed how the growth of a firm both organically and through acquisition is strongly influenced by the experience of its managers and the history of the firm's development.