Sunk Costs and the Natural Resource Extraction Sector: Analytical Models and Historical Examples of Hysteresis and Strategic Behavior in the Americas
Bradford L. Barham,
Jean-Paul Chavas () and
Oliver T. Coomes
Land Economics, 1998, vol. 74, issue 4, pages 429-448
Sunk costs play a significant role in shaping industry conduct and development outcomes associated "with the resource extraction sector. Their role is explored here by: (1) developing analytical models that show specifically how sunk costs influence investment behavior and outcomes; and (2) considering the historical experience during major epochs of two important extractive industries. The models demonstrate how sunk costs, in conjunction with uncertainty or strategic behavior, can severely distort efficiency and equity outcomes. The Amazon rubber boom and bust and the pan-American aluminum industry illustrate the significance of sunk costs in the extractive sector and beyond.
References: Add references at CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
A subscription is required to access pdf files. Pay per article is available.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:uwp:landec:v:74:y:1998:i:4:p:429-448
Access Statistics for this article
More articles in Land Economics from University of Wisconsin Press
Series data maintained by ().