Why is qwerty economically significant

The issue is what kind of policy action is best at different points of a market process. But appropriate policy requires that government know when future knowledge will arrive. Or if economic agents have the information, they cannot coordinate in a way to exploit superior alternatives. They are skeptical that government would have superior information, and they believe that market processes can overcome coordination issues or other barriers that might prevent adoption of superior alternatives.

With individual decision making in a free market framework, the neoclassical focus on institutional context, resource endowments, underlying technologies, and optimizing behavior, provides a powerful tool for understanding resource allocation. Yet for historical analysis, neoclassical theory falls short because it usually takes institutions, endowments, and technologies as given, which is unsuitable as the time frame for analysis expands. An appealing feature of the concept of path dependence is that random events have been important to institutions and technology.

Heroic individuals have played an important role in the design of governing institutions. Random discovery has contributed significantly to our basic knowledge. In other works, we live in a world where information reveals itself in an uncertain way. Optimizing behavior may help in directing society towards the best use of new information, but it does so imperfectly.

The very existence of uncertainty affects behavior. For example, path dependence has been useful to applied finance in understanding a puzzling tendency for managers to reject investment projects that have the highest perceived payoff.

Instead, they often choose a project with a lower payoff, but one that allows for future flexibility.

Real option theory helps to explain this decision. These managers preserve a real option rather than committing based solely on maximized present value. They know they have incomplete information at any point in time and desire flexibility because they know that new information will be forthcoming. For example, a firm might invest in a new production plant but choose to make it smaller than might be warranted based on projections of demand. But because the projections are uncertain, there is value in the option to build additional capacity in the future, and building a small plant preserves the option.

Rather than committing investment over a long period of time, these managers make a sequence of decisions based on the information at hand but expecting future information to assist in making further decisions. David argues for the legitimacy of stochastic economic models with multiple equilibria potential outcomes. Liebowitz and Margolis forcefully and effectively argue that economic processes can move an economy out of clearly undesirable situations.

The issue then becomes whether we have attained the best outcome, and if not, how can we get there. David favors stochastic models because they allow for contingent processes, where outcomes are contingent upon certain historical factors. Economic change is like a branching process. At a point in time, we have several alternative choices to make.

Once choices are made, we face a new set of alternatives branches in a decision tree. Such a contingent process may or may not be inefficient and there is nothing that guarantees a particular outcome.

Under some conditions, path dependent processes can lead to outcomes that are inefficient. Businesses invest in durable equipment and commit to particular technology. Consumers develop habits. Products are sometimes more useful if others use it, so that a consumer will most desire the ones that others have already purchased. As a result, the process systematically leads to an inferior outcome.

Some of the same forces that lead to market failure positive economies of scale, network effects also lead to path dependent processes. Thus while path dependence does not necessarily lead to inefficient outcomes, it can.

Moreover, their second-degree path dependence can occur because of mistakes though informed mistakes. Yet the ahistorical approach they favor means that the nature of the mistake is never in question.

Liebowitz and Margolis do not dispute that economic theory can predict inefficient outcomes and correctly note that an important issue is whether these predictions are empirically relevant. The major problem with their empirical studies is that correctly specifying the appropriate counterfactual situation is very difficult. To properly measure how well off would we be if we had committed to another technology requires identification of advances that would take place in a technology that was never seriously pursued.

In addition it must account for expenses incurred to mitigate problems that arise from the technology that was chosen. Much of the debate surrounding path dependence has centered on efficiency. There has also been much discussion of the related issue of what to do about it. Before turning to economic policy, we need to consider the topic of allocation, which has been relatively neglected.

Neoclassical theory can show that trade can make people better off, but under general conditions many potential outcomes of a trading process could occur. Each outcome may be better than where everyone started, but exactly what outcome obtains is more difficult to predict.

The question is the process of trading. Reasonable models that are path dependent might describe the process. The outcome may be efficient, but how we got there is an interesting question that path dependence can usefully describe. This is an example of an allocation process, about which Liebowitz and Margolis have said little, but that David argues is an important subject of study. Cost Globalization Drivers. Competitive Drivers. Globalization and Industry Structure. Generic Strategies for Global Value Creation.

Aggregation Minicase: Globalization at Whirlpool Corporation. To Serve U. PursuingAdaptation and Aggregation. Aggregation and Arbitrage. Arbitrage and Adaptation. Developing an AAA Strategy. Global Strategy as Business Model Change.

Components of a Business Model. Minicase: Customer Intimacy at the Four Seasons. Target Markets and Modes of Entry. Target Market Selection. Measuring Market Attractiveness. Market Size and Growth Rate. Institutional Contexts. A Key Challenge for Carmakers.

Globalizing the Value Proposition. Minicase: Targeting Muslim Customers. Global Branding. Determinants of Global Brand Structure. Market Dynamics. Formulating a Global Brand Strategy. Managing Key Strategic Brands. Benefits of Corporate Branding. Cost Savings. Financial Analysis. Role of Brand Analysis.

Brand Strength Score. Brand Value. Globalizing the Value Chain Infrastructure. Core Competencies. To Outsource or Not to Outsource. Lower Costs. Greater Flexibility. The telegraph receiver would hover over those letters, waiting for context to make everything clear. So the qwerty keyboard wasn't designed to be slow.

But it wasn't designed for the convenience of you and me, either. The simple answer is that qwerty won a battle for dominance in the s. Sholes' design was taken up by the gunsmiths E Remington and Sons. It wasn't the only typewriter around - Sholes has been described as the "52nd man to invent the typewriter" - but the qwerty keyboard emerged victorious.

The Remington company cannily provided qwerty typing courses, and when it merged with four major rivals in , they all adopted what became known as "the universal layout". And this brief struggle for market dominance in s America determines the keyboard layout on today's iPads. Nobody then was thinking about our interests - but their actions control ours. And that's a shame, because more logical layouts exist: notably the Dvorak, designed by August Dvorak and patented in It favours the dominant hand left and right-hand layouts are available and puts the most-used keys together.

The US Navy conducted a study in the s demonstrating that the Dvorak was vastly superior: training typists to use the Dvorak layout would pay for itself many times over. So why didn't we all switch to Dvorak? The problem lay in co-ordinating the switch. Qwerty had been the universal layout since before Dvorak was born. Most typists trained on it. Any employer investing in a costly typewriter would naturally choose the layout that most typists could use, especially when economies of scale made it the cheapest model on the market.

Dvorak keyboards never stood a chance. So now we start to see why this case matters. Many economists argue qwerty is the quintessential example of something they call "lock in".

It's about Microsoft Office and Windows, Amazon's control of the online retail link between online buyers and sellers, and Facebook's dominance of social media. How a razor revolutionised the way we pay for stuff. What leaded petrol says about the limits of regulation?

How the plough changed everything. How Ikea's Billy bookcase took over the world. If all your friends are on Facebook apps such as Instagram and WhatsApp, doesn't that lock you in as surely as a qwerty typist?

This matters. The lock-in is the friend of monopolists, the enemy of competition, and may require a robust response from regulators. But maybe dominant standards are dominant not because of lock-in, but just because the alternatives simply aren't as compelling as we imagine.