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Inefficient markets

By Edward Chancellor   November 2002

Technology and path dependency

Does the best technology always win out? Some economists say no. They have argued in recent years that chance often plays a decisive role in the adoption of technologies and that advantage normally goes to the first-movers in a new market. During the bull market, such views were widely accepted and served to hype the tech bubble. In more sober times, the same claims are receiving the scepticism they deserve.

It was Stanford economist W Brian Arthur who put forward the hypothesis that historical accident often determines the success or failure of competing new technologies. According…

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