On the Effects of Sunk Costs
This paper studies the effect of sunk cost on equilibria for a dynamic oligopoly with entry. Sunk costs are a hysteresis effect that cannot be adequately modelled in a static framework. When sunk costs are added to a dynamic model they do not act as a barrier to entry, contrary to general perception. Using the subgame perfect Nash equilibrium concept shows that as the fraction of costs that are sunk rises, the number of entrants rise and profits per firm fall.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1984|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (613) 533-2250
Fax: (613) 533-6668
Web page: http://qed.econ.queensu.ca/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:555. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock)
If references are entirely missing, you can add them using this form.