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Technology/
industry C:
Lock-in to new
'temporary
equilibrium'
Technology/
industry B:
Lock-in to new
temporary
equilibrium'
Development
of
technology
or
industry
Technology/
industry A:
Lock-in to
'temporary
equilibrium'
'Endogenous
innovation'
out of
equilibrium
Endogenous
innovation'
out of
equilibrium
Time
Figure 3
.
3 A Setteri eld-type model of path-dependent evolution
equilibrium' itself will tend to stimulate purposive behaviour by some economic actors
to explore pre-emptive breaks from the locked-in technological-industrial activity in
order to establish a new competitive 'temporary equilibrium' path of technological or
industrial development. Path-dependent economic evolution in this schema is one of a
succession of 'temporary' equilibria' (Figure 3.3). We are not overly convinced by this
conception, since any temporary period of stability would be interpreted necessarily as
an 'equilibrium', when the system may in fact be far from any such state.
A third conception is that which frees the idea of path dependence from any neces-
sary connection with equilibrium, and which views path dependence as a dynamic open
historical process by which technologies, industries and institutions evolve along unfold-
ing trajectories: what we might term a non-equilibrium conception of path depend-
ence (Figure 3.4).
17
These trajectories are shaped not only by the sequences of prior
developments and inl uence of earlier events, but also by the evolution of the processes
(mechanisms) of path dependence themselves. This is what the time-varying historical
process function
F
x
(
t
) used above is meant to capture. Under this approach, explicit
allowance is made for the possible interaction between the evolving technology, indus-
try or institution and the various path dependence processes (such as learning, network
externalities, etc.) that are shaping it. Put another way, a path-dependent technological,
industrial or institutional trajectory and its associated path dependence processes may
co-evolve. Such a system need never approach any form of equilibrium. Furthermore,
such a schema allows for various possible evolutionary pathways. It can encompass the
case of endogenously generated incremental path-dependent evolution as well as con-
tinuous evolution in response to constant change in the external environment: it allows
for both slow and more rapid path-dependent evolution. It allows for the adaptation
and mutation of a technology, industry or institution over time (of which numerous
examples abound - indeed many technologies, industries and products are characterised
by this mode of evolution). And it also includes those cases where a path-dependent
