Sunk Entry Costs, Sunk Depreciation costs, and Industry Dynamics

Adelina Gschwandtner and Val E. Lambson ()
Additional contact information
Val E. Lambson: https://econ.univie.ac.at

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: Dynamic competitive models of industry evolution predict higher variability of firm value over time and lower variability of firm activity over time in industries where sunk entry costs are higher. These predictions have done well empirically. Here we extend the theory to allow an additional category of sunk costs---depreciation---and argue that this generates countervailing effects. We test this assertion empirically and find the results are consistent with the theory.

JEL-codes: L00 (search for similar items in EconPapers)
Date: 2009-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://papersecon.univie.ac.at/RePEc/vie/viennp/vie0902.pdf (application/pdf)

Related works:
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:vie:viennp:vie0902

Access Statistics for this paper

More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Bibliographic data for series maintained by Paper Administrator ().