Exit, Sunk Costs and the Selection of Firms

Y. Richelle and Paolo Garella

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The paper analyzes the question of which cost characteristics are exhibited by the rms that exit an oligopolistic market when costs are asymmetric and firms can credibly be forced out by the remaining competitors. The main results are: (i) if reentry is impossible (due to the presence of large sunk costs), then the firm with the highest marginal cost function dtays in; if reentry is costless then the firm with the highest average cost exits. Consequenty sunk costs not only affect the number of firms in an industry, but they also enter the determination of the type of firms that resist predation.

Date: 1995-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://amsacta.unibo.it/5112/1/214.pdf (application/pdf)

Related works:
Journal Article: Exit, sunk costs and the selection of firms (1999)
Working Paper: Exit, Sunk Costs and the Selection of Firms (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:214

Access Statistics for this paper

More papers in Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna Contact information at EDIRC.
Bibliographic data for series maintained by Dipartimento Scienze Economiche, Universita' di Bologna ().