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This chapter introduces the two key concepts of strategic complementarity and externality, which are related to each other. Take a large train station as an example. People come and go. When observing stairs, two flows of people are usually apparent with one ascending and the other descending. Generally, the flows do not collide with each other but move rather smoothly. People sometimes walk on the left side, while they may walk on the right side at other times. If everyone else walks on the left side, it is beneficial to walk on the left rather than on the right.
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This section is related to Kawagoe and Matsui (2012).
See Aoki (2001) for extensive discussion on comparative institutional analysis.
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