Sunk costs and real options in antitrust
By: Robert S. Pindyck.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11430; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11430.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Antitrust law.; Costs, Industrial.
Description: "Sunk costs play a central role in antitrust economics, but are often misunderstood and mismeasured.  I will try to clarify some of the conceptual and empirical issues related to sunk costs, and explain their implications for antitrust analysis.  I will be particularly concerned with the role of uncertainty.  When market conditions evolve unpredictably (as they almost always do), firms incur an opportunity cost when they invest in new capital, because they give up the option to wait for the arrival of new information about the likely returns from the investment.  This option value is a sunk cost, and is just as relevant for antitrust analysis as the direct cost of a machine or a factory"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 7/8/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.