Clio and the economics of QWERTY
Clio and the economics of QWERTY is a beautiful, incitement and entertaining -- if stylistically idiosyncratic -- exploration of economic history in 5 pages.
In his short article, Paul A. David walks his reader through a detailed description of the history of the QWERTY keyboard layout and explains why QWERTY was selected over other (better!) alternatives like Dvorak.
He argues that QWERTY was "locked in" to its dominant market position through the widespread growth in touch typing. He attributes three key features to the arrangement: (1) technical interrelatedness, (2) economies of scale, and (3) quasi-irreversibility which he calls the ingredients of "QWERTY-nomics."
He describes technical interrelatedness as the requirement for system compatibility between keyboard "hardware" and the "software" represented by the touch typist's memory. Because this was high, meant that the expected present value of a typewriter as an instrument of production was dependent upon the availability of compatible software created by typists' decisions as to the kind of keyboard they should learn. As a result, as QWERTY grew, the cost of choosing it went down.
Economies of scale represented the idea that through network effects, each decision to choose QWERTY would increase the chance that the next person would use QWERTY. This fact means that even in a purely stochastic process, we would expect to see high concentration.
Quasi-irreversibility means that there is a very high cost (and increasingly high cost) of switching form QWERTY to anything else.
Theoretical and practical relevance:
The article has been cited thousands of times and is a very famous article in the economics of diffusion of innovation and a go-to citation for issues of network effects in markets. It has resulted in the term "QWERTY-nomics" being used more widely and in the publication of several books on the subject.