Sunk Cost Efficiency with Discrete Competitors

Wilson, Linus

doi:10.2139/ssrn.972175

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

See all articles by Linus Wilson

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration

Date Written: February 1, 2010

Abstract

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

Wilson, Linus, Sunk Cost Efficiency with Discrete Competitors (February 1, 2010). 2011, Southwestern Economic Review, Vol. 38, No. 1, pp. 37-48.. Available at SSRN: https://ssrn.com/abstract=972175 or http://dx.doi.org/10.2139/ssrn.972175