Are Sunk Costs a Barrier to Entry?
نویسندگان
چکیده
منابع مشابه
Are Sunk Costs a Barrier to Entry?
The received wisdom is that sunk costs create a barrier to entry—if entry fails, then the entrant, unable to recover sunk costs, incurs greater losses. In a strategic context where an incumbent may prey on the entrant, sunk entry costs have a countervailing effect: they may effectively commit the entrant to stay in the market. By providing the entrant with commitment power, sunk investments may...
متن کاملAre sunk costs really sunk?
The problem of relevance of sunk costs in managerial decisions concerning a plant is studied. It is shown that under fairly general assumptions about the rationality of the managers the irrelevance of such costs, frequently claimed by economists and accountants, is weakly founded. An application to a specific problem of use of a machine is studied and the optimal use decision problem solved.
متن کاملSunk Costs, Fairness, and Disagreement
We study a bilateral trading relationship in which one agent, the seller, can make a non–recoverable investment in order to generate potential gains from trade. Afterwards, the seller makes a price offer that the buyer can either accept or reject. Economic theory predicts that if agents are selfish, neither the level of investment cost nor the buyer’s information about costs should affect the o...
متن کاملFixed and Sunk Costs Revisited
The authors attempt to clarify the concepts of, and the link between, fixed costs and sunk costs. They argue that the root for possible confusion between fixed costs and sunk costs is the inconsistency in defining the term fixed costs. They define fixed costs uniformly as the costs that are independent of the level of output and suggest that instructors refer to the part of fixed costs that are...
متن کاملVarying the costs of sunk costs: optimal and non-optimal choices in a sunk-cost task with humans.
Twelve adult human subjects were exposed to a sunk-cost procedure with two options: a mixed-ratio schedule of points later exchangeable for money, and an escape schedule that cancelled the current trial and initiated a new one. The mixed ratio included four values, arranged probabilistically in such a way that the expected ratios favored either persistence or escape. These probabilities were va...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Journal of Economics & Management Strategy
سال: 2008
ISSN: 1058-6407,1530-9134
DOI: 10.1111/j.1530-9134.2008.00172.x