Sunk Costs and Resource Mobility: Implications for Economic and Policy Analysis
AbstractThe implications of sunk costs for many key questions in agricultural economics have yet to be explored. This paper uses a dynamic model of investment behavior to explore how sunk costs can shape market outcomes in ways that might not match predictions of standard competitive models. Applying the model to several key issues in agricultural markets and international trade offers new perspectives that challenge conventional wisdoms. Institutional and policy innovations are also examined for their potential to improve welfare outcomes when sunk costs impede factor mobility.
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Bibliographic InfoPaper provided by Wisconsin-Madison Agricultural and Applied Economics Department in its series Wisconsin-Madison Agricultural and Applied Economics Staff Papers with number 410.
Length: 15 pages
Date of creation: Apr 1997
Date of revision:
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Web page: http://www.aae.wisc.edu/www/pub/sps/body.html
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- Bradford L. BARHAM & Jean-Paul CHAVAS, 1997. "Sunk Costs And Resource Mobility: Implications For Economic And Policy Analysis," Staff Papers 410, University of Wisconsin Madison, AAE.
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