Effect of sunk cost on the entering of potential firms
Lin Qian
Abstract
Lin Qian
Abstract
On the condition that the scale of industry remains unchanged,sunk cost would be one of the factors that hedge the potential firms from entering into the industry.This article uses theory and examples to explain that the low sunk cost firms have lower industry sunk cost and higher social wealth,so low sunk cost firms can drive away the high sunk cost firms.
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On the condition that the scale of industry remains unchanged,sunk cost would be one of the factors that hedge the potential firms from entering into the industry.This article uses theory and examples to explain that the low sunk cost firms have lower industry sunk cost and higher social wealth,so low sunk cost firms can drive away the high sunk cost firms.
Key concepts: Sunk costs, Economics, Industrial organization, Microeconomics, Hedge, Business, Biology, Ecology