Path dependence

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Updated: Aug 20, 2021

A concept according to which economic processes progress towards a unique predetermined equilibrium but instead reach one of many equilibria, depending on the process of getting there along a particular path. It implies irreversibility of the effect of transitory random shocks, or accidental events, upon the long-run outcome. See also hysteresis.

Reference: Oxford Press Dictonary of Economics, 5th edt.


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