SUNK COSTS AND RESOURCE MOBILITY: IMPLICATIONS FOR ECONOMIC AND POLICY ANALYSIS

The 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.


Issue Date:
1997
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/12686
Total Pages:
15
Series Statement:
Staff Paper 410




 Record created 2017-04-01, last modified 2017-08-23

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