Conventional economists assume that competition unconditionally generates efficiency, an idea, which is, however, defied by the concept of path dependence. To comprehend this, nevertheless, this term must firstly be defined: “Path dependence is the recognition that small events and chance circumstances can determine solutions that once they prevail lead to a particular – not necessarily efficient – path of development.” (David, 1985) Paul David’s definition of path dependence as a technological lock-in will be further explained in this essay as well as relating it to a highly relevant case study. It must, however, not be neglected that apart from this view, there are two additional ones concerning path dependence: firstly as dynamic increasing returns (suggested by Brian Arthur) and secondly as institutional hysterisis (as proposed by North and Setterfield).
One of the key examples of a path dependent process, therefore being the one discussed in this essay, is the ascendance of the QWERTY keyboard within the market: indeed, it is currently the most utilized layout for English-language keyboards. Paul David questions how it became globally dominant even though competing designs proved to be technically superior. Among QWERTY’s disadvantages is the fact that only 51% of the most used letters in the alphabet are located in the first row (David, 1986). In addition, although the great majority of typists are right handed, QWERTY induces the left hand to do 56% of the work. Lastly, 48% of all movements for consecutive letters use only one hand instead of two. (The Cambridge encyclopedia of language)
QWERTY’s rise to global dominance can be explained with a quick insight into its history, taking into account various small, but rather crucial events which occurred throughout it. In the 1860’s, Christopher Sholes, with the assistance of Carlos Glidden and Samuel W. Soule, created a typewriter, filing for a patent application in 1867. It had, nonetheless, a serious flaw: its type bars tended to collide if hit in rapid sequence. Consequently, Sholes attempted to revert this defect through an endless process of trials, finally consenting on a letter arrangement similar to the current QWERTY design. Therefore, as argued by Liebowitz, correcting the defect of jamming type bars was the priority, as opposed to the maximization of typing speed (Liebovitz, 1990). QWERTY’s inefficiency regarding typing facilitation soon became its main point of critique, being condemned until the present days. In 1873, the rights to the Sholes patent were sold to E. Remington & Sons. Remington took on the task to further improve the typewriter, finally initiating commercial production at the end of that year. In the 1880s, the importance of typewriters increased, hence boosting its demand and resulting in the emergence of a great number of competing typewriter layouts. One fortunate event that gave QWERTY a slight advantage in relation to its competitors was the fact that the eight-finger touch typing method was invented based on the Remington typewriter. Of all the events that led QWERTY to win the market-share war, the most important one is the following: Frank McGurrin (Salt Lake City) used the Remington keyboard to participate in a typing contest held in Cincinnati on July the 25th, 1888. His choice of a keyboard layout was completely arbitrary, but his brilliant victory (due to memorization of the keyboard layout) over other contestants gave the impression that the QWERTY keyboard was technically superior to its competitive alternatives. This event, as well as the other typing contests McGurrin participated in after that, contributed to the establishment of QWERTY as the standard keyboard. (David, 1986)
Even though QWERTY is the most famous case of path dependency, numerous others occurred throughout economic history. This makes it important to identify their similarities, consequently understanding the ideal conditions...