SUNK COSTS AND RESOURCE MOBILITY: IMPLICATIONS FOR ECONOMIC AND POLICY ANALYSIS

Bradford L. Barham and Jean-Paul Chavas ()

No 12686, Staff Papers from University of Wisconsin-Madison, Department of Agricultural and Applied Economics

Abstract: The implications of sunk costs for many key questions in agricultural economics have yet to be explored. This paper uses a dynamic model of investment behavior to explore how sunk costs can shape market outcomes in ways that might not match predictions of standard competitive models. Applying the model to several key issues in agricultural markets and international trade offers new perspectives that challenge conventional wisdoms. Institutional and policy innovations are also examined for their potential to improve welfare outcomes when sunk costs impede factor mobility.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 15
Date: 1997
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Sunk Costs and Resource Mobility: Implications for Economic and Policy Analysis (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:wisagr:12686

DOI: 10.22004/ag.econ.12686

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