Sunk Costs, Market Structure, and Growth

1996 ◽  
Vol 37 (4) ◽  
pp. 895 ◽  
Author(s):  
Pietro F. Peretto
Keyword(s):  
Market Structure ◽  
Sunk Costs

Sunk Costs and Market Structure: A Review Article

1992 ◽  
Vol 40 (2) ◽  
pp. 125 ◽  
Author(s):  
Richard Schmalensee
Keyword(s):  
Market Structure ◽  
Review Article ◽  
Sunk Costs

scholarly journals Mergers and Sunk Costs: An Application to the Ready-Mix Concrete Industry

2014 ◽  
Vol 6 (4) ◽  
pp. 407-447 ◽  
Author(s):  
Allan Collard-Wexler
Keyword(s):  
Market Structure ◽  
Sunk Costs ◽  
Large Impact ◽  
Entry Barriers ◽  
Horizontal Mergers ◽  
Using Data ◽  
Lasting Change ◽  
Ready Mix Concrete

Horizontal mergers have a large impact by inducing a long-lasting change in market structure. Only in an industry with substantial entry barriers is a merger not immediately counteracted by post-merger entry. To evaluate the duration of the effects of a merger, I use the model of Abbring and Campbell (2010) to estimate demand thresholds for entry and for exit. These thresholds, along with the process for demand, are estimated using data from the ready-mix concrete industry. Simulations predict that a merger from duopoly to monopoly generates between nine and ten years of monopoly in the market. (JEL G34, K21, L12, L13, L41, L61)

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