Sunk Cost Efficiency with Discrete Competitors
2011, Southwestern Economic Review, Vol. 38, No. 1, pp. 37-48.
24 Pages Posted: 28 Mar 2007 Last revised: 15 Apr 2012
Date Written: February 1, 2010
When entrants only differ in their exogenous entry costs, the order in which potential firms enter does not affect industry size. With discrete competitors, entry orderings can affect total sunk costs and the identity of entrants. A necessary and sufficient condition is established for sunk, entry costs in the industry to be minimized, regardless of entry ordering.
Keywords: L11, L13
JEL Classification: Sunk Costs, Entry, Market Structure
Suggested Citation: Suggested Citation