Why did QWERTY win, not the faster Dvorak? Because with increasing returns, whichever standard gets an early lead becomes more attractive, which grows its lead — until it LOCKS IN. The outcome is decided by history, not by which was best, and once locked it’s costly or impossible to switch. Slide which side gets the early break and watch it capture the market.
Lock-in under increasing returns (Arthur 1989): when adopting a standard raises its value to the next adopter, small early advantages compound. A Polya-urn model — adopt A with probability proportional to current A-share — converges to a monopoly whose identity depends on EARLY random events, not on intrinsic quality (a technically superior option can lose). The final state is path-dependent, and switching afterward faces a coordination barrier. A fail-loud self-check throws unless flipping which side leads early flips which side locks in. ◆ real economics of standards, node-verified.
The reinforcement model gives the mechanism, not any specific market; the path-dependence — history selects the winner, and it need not be the best — is the exact claim. This is hysteresis: the outcome remembers where it started, like [[the-hysteresis-loop]].