Friday 2 May 2014

Lock-in, path dependence, and government

Twenty years ago, all the hip folks thought a great argument for government intervention was that markets could be subject to inefficient lock-in. Paul David and Brian Arthur were the most famous proponents of this line of argument. In that world, it could make sense for government to put in place mechanisms to slow down adoption of particular standards so we could make sure the right one was adopted. Stan Liebowitz and Stephen Margolis nicely showed not only that no historical cases really matched the Arthur/David story, but also that the scope for beneficial intervention was pretty slim when viewed correctly from an ex ante perspective: the costs of the delay were certain, and how could we really tell which delays, if any, would really prove worthwhile? See here for related discussion.

Today's example of pernicious lock-in: governments can take rather a long time to rescind dumb laws.
In 1982 Marshfield, Massachusetts banned coin-operated video games. Over the years many have tried to get the law reversed and failed. But the good news is that Marshfield lifted the long-standing ban this week. On Monday, residents of the small town voted 203-175 to overturn the bylaw and welcome arcade gaming back into town. To put this ban into perspective, that's a 32 year ban on playing arcade games; compared to China's 14 year ban on console games lifted this year. Incredible!
So what caused arcade games to be banned in the first place? Apparently residents believed that arcade games attracted an "undesirable element." In 1983 the ban was challenged and upheld by the Massachusetts Supreme Judicial Court, based on the rationale that video games are "addictive to youth, who will skip school and spend unreasonable sums of money to play them at a quarter -- and sometimes 50 cents."
At least that's what Thomas R. Jackson, a retired narcotics agent and the resident who proposed the ban, said at the time. He also alleged at the time that gambling and drug activity were connected to the video game locations where youth "congregate unsupervised."
Read the whole thing.

I suppose that the silver lining could be that nobody in town's really had a go at an old Galaga machine, or Ms Pac-Man, or Zaxxon. They could open a retro 1980s gaming palace, imagining that the place has just opened subsequent to the failure of the 1982 law, with machines from 1982 and earlier only. Then bring in some 1983 machines next year. While it would be ridiculously fun for folks there now, it hardly outweighs the losses incurred over the last 30 years.

Lousy lock-in. If only government could protect us from it.

HT: The twitter feed of the NZ Office of Film and Literature Classification, the censorship board whose decisions of decades ago, banning all kinds of stuff now considered tame, continue to be in force until and unless somebody makes application for a reconsideration.


  1. Coin-ops have been dead for years. I think Japan is the only place where large arcades still exists. This is mainly due to the proliferation of home video consoles and HDTV/surround sound setups that are superior to what arcades can provide. So it's strange they even bothered to rescind the law.

  2. Yet another reason to support Heinlein's idea of a House of Repeal.

  3. Of course. All the more reason that it works as 80s retro themed...