Increasing returns create self-reinforcing patterns that lock in dominant solutions and grow irreversible.

Evidence

On a general level, the concept of increasing returns highlights positive feedback processes— that is, the increase of a particular variable leads to a further increase of this very variable. More specifically, the notion of increasing returns indicates self-reinforcing processes with increasing benefits; repetitive pursuits to earn this increasing rent are likely to culminate in a patterned dynamic. Eventually, a dominant solution emerges in terms of recursive action patterns (Giddens, 1984). The flip side of these returns is that the whole process becomes more and more irreversible, particularly in cases of high investments and/or high fixed costs (Ghemawat, 1991). — Jörg Sydow, Georg Schreyögg, and Jochen Koch, Organizational Path Dependence, 44

Categorization

• DEFINE: Defines increasing returns as positive feedback loops where a rising variable drives its own further rise.
• XREF: Connects to path-dependence and lock-in literature (David, Arthur) and to technological momentum arguments about fossil-fuel infrastructure. — connects to: High setup costs and sunk investment make institutional arrangements self-stabilizing. — Daryl Levinson and Benjamin I. Sachs, Political Entrenchment and Public Law, 197