On entry and exit in response to aggregate shocks
Laura Piscitelli,
Michael Grinfeld,
Harbir Lamba and
Rod Cross
Applied Economics Letters, 1999, vol. 6, issue 9, 569-572
Abstract:
This note extends the Dixit-Pindyck analysis of investment, in the form of market entry and exit under sunk costs, to the case of heterogeneous sunk costs. The implication is that the market displays full hysteresis, in the form of remanence and dependence on the nondominated extremum values of the aggregate shocks experienced. These implications are illustrated by numerical simulations.
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:6:y:1999:i:9:p:569-572
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DOI: 10.1080/135048599352619
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