An early lead becomes a later handicap, because the leader has committed to an arrangement that latecomers can skip.
Romein, a Dutch historian, published the principle in 1937 from the observation that societies and firms that led in one period were frequently overtaken by those that arrived later with newer infrastructure and no sunk commitments. The leader's disadvantage is not complacency but investment: the earlier system works, is paid for, and must be written off before the better one can be adopted.
In practice
- A country with comprehensive copper telephone lines is slower to fibre than one with almost no lines at all.
- A firm with a functioning system from 2005 is competing with a firm that started last year on current tools.
- Standing
- Compare path dependence, lock-in and core rigidities, which describe the same mechanism from different disciplines.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money