Path Dependency
Definition of 'Path Dependency'An idea that tries to explain the continued use of a product or practice based on historical preference or use. This holds true even if newer, more efficient products or practices are available due to the previous commitment made. Path dependency occurs because it is often easier or more cost effective to simply continue along an already set path than to create an entirely new one. |
|
Investopedia explains 'Path Dependency'An example of path dependency would be a town that is built around a factory. It makes more sense for a factory to be located a distance away from residential areas for various reasons. However, it is often the case that the factory was built first, and the workers needed homes and ammenities built close by for them. It would be far too costly to move the factory once it has already been established, even though it would better serve the community from the outskirts of town. |
Related Definitions
Articles Of Interest
-
Measuring Company Efficiency
Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period. -
Alternatives To The Cold Call
Want to build your business as a financial professional? We provide some choice advice. -
Alternatives To Business School
Universities don't have a monopoly on information - advance in your career without going back to school. -
Agency Bonds: Limited Risk And Higher Return
Discover these safe alternatives to Treasury bonds. -
The Nash Equilibrium
Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ... -
Dealing With 10 Coworker Personality Conflicts
The financial world is filled with dysfunctional workers; find out if you're one of them and what you can do about it. -
6 Ways Mentors Elevate Your Career
Find out how experienced and credible mentors can get you where you want to go. -
The Basics Of A Financial Analysis Report
Running financial analysis on a company or industry is a key skill every investor must learn and understand how to undertake without which an ineffective financial report and investment recommendation ... -
How Education And Training Affect The Economy
Education and training benefit not only the worker, but also the employer and the country as a whole. -
Viewing The Market As Organized Chaos
Find out how a cat and a ladybug prove markets are both random and efficient.
Free Annual Reports