ABSTRACT
Path-dependence defines the set of dynamic processes whereby small events have long-
lasting consequences, which economic action can modify but only to a limited extent.
The trajectory of a path-dependent process cannot be fully anticipated on the basis of
the original events. Path-dependence is different from past-dependence because the
former is able to accommodate the consequences of actions at each point in time. Path-
dependence analysis is systemic and dynamic, because it focuses attention on the process
of change that is generated by the interaction of a variety of agents whose behaviour is
constrained by their localisation in time and space. Path-dependence is analytically
generated by the overlapping of irreversibility, indivisibility and structural change, that
is the endogenous change of utility and production functions, as opposed to parametric
behaviour (David, 1975, 1985, 1988, 1992c, 1997).
