The Troubled Path of the Lock-In Movement
Stan J. Liebowitz
University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics
Stephen E. Margolis
North Carolina State University - Department of Economics
June 1, 2012
Journal of Competition Law and Economics, Forthcoming
Paul David (1985), Brian Arthur (1989) and others introduced a 'new economics' of increasing returns, alleging problems of path dependence and lock-in. These conditions were claimed to constitute market failure and were soon featured in antitrust actions, most famously in Microsoft. We (1990, 1994) challenged the empirical support for these theories and their real-world applicability. Subsequently, David and others have responded, arguing that lock-in theories require no empirical support, market failures were never an important feature of their writings, and the empirical evidence that had been forward was never meant to be taken literally. Nevertheless, David and others claim that their theories have policy significance. Indeed, lock-in claims continue to appear as a basis for antitrust action. We now respond to the response of David and others, review new developments in this literature, and consider antitrust implications in light of the deficiencies in lock-in theories and related empirical work.
Number of Pages in PDF File: 27
Keywords: qwerty, path dependence, lock-in, network effect, Paul David, Brian Arthur, network externality
JEL Classification: K2, L4, L5, O3
Date posted: October 30, 2010 ; Last revised: February 13, 2013
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