Sunk Costs, Depreciation, and Industry Dynamics

Adelina Gschwandtner; Val E. Lambson

doi:10.1162/rest_a_00236

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Sunk Costs, Depreciation, and Industry Dynamics

Adelina Gschwandtner¹; Val E. Lambson²

¹ Vienna University of Economics and Business · ² Brigham Young University

The Review of Economics and Statistics 2012 open access

Two of the most robust results from dynamic competitive models of industrial organization suggest that higher-sunk-cost industries should exhibit higher intertemporal variability in the market value of their firms and lower intertemporal variability in the size of their industries. These predictions have done well empirically. This paper argues on theoretical and empirical grounds that depreciation generates countervailing effects.

DOI: 10.1162/rest_a_00236
Volume: 94 (4)
Pages: 1059-1065
Language: en
Export: BibTeX
Sources: openalex crossref