Endogenous Sunk Cost, Quality Competition and Welfare
George S. Ford, Michael Stern
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DOI: 10.4236/tel.2011.13018   PDF   HTML     5,272 Downloads   9,433 Views  

Abstract

Competition in quality with escalating levels of endogenous sunk costs may produce levels of concentration even higher than expected in their absence. We show that consumers may very well benefit from such expenditures despite the effects on concentration and likely attenuation of price competition.

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G. Ford and M. Stern, "Endogenous Sunk Cost, Quality Competition and Welfare," Theoretical Economics Letters, Vol. 1 No. 3, 2011, pp. 88-90. doi: 10.4236/tel.2011.13018.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1] J. Sutton, “Sunk Cost and Market Structure,” MIT Press, Cambridge, 1991.

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