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 "text": "An absent economic substrate is not a neutral postponement. It transfers the choice of pricing, compatibility, and migration rules to the period in which participants already depend on the system.\n\nFarrell and Klemperer classify switching costs and network effects as mechanisms that bind customers and markets to early choices when products are incompatible. Their analysis gives market share an asset value, makes early adoption resemble a long term commitment, and connects installed base growth to later pricing power. The relevant mechanism is cumulative. Participants make complementary investments, expectations begin to track past adoption, and an entrant must overcome both coordination loss and the cost of switching. A convention that appears provisional before participation may therefore become costly to replace after participation.\n\nThe evidence qualifies the claim. Farrell and Klemperer analyze network markets and standards generally. They do not study Mosaic Companion, sovereign agent runtimes, machine to machine settlement, or a particular pricing convention. Their chapter does not establish that every convention hardens quickly, and it does not measure the later cost of omitting an economic field from a tool manifest. It establishes the mechanism by which early choices can acquire installed base protection and create later pricing power.\n\nThe institutional implication is narrower and still consequential. A runtime should define the minimum economic interface before broad participation: the unit priced, permitted pricing forms, settlement identity, attribution, and a controlled migration rule. Those terms need not be fixed forever. They must be explicit enough that revision remains a governed change instead of a forced renegotiation after dependency has formed.",
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  "citation": "Wulf A. Kaal, Institutional Requirements for Sovereign Local Agent Runtimes (2026). SSRN: https://ssrn.com/abstract=7314479",
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