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Sunk Costs and Resource Mobility: Implications for Economic and Policy Analysis

Author

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  • Barham, Bradford L.
  • Chavas, Jean-Paul
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.
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Suggested Citation

  • Barham, Bradford L. & Chavas, Jean-Paul, 1997. "Sunk Costs and Resource Mobility: Implications for Economic and Policy Analysis," 1997 Conference, August 10-16, 1997, Sacramento, California 197060, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae97:197060
    DOI: 10.22004/ag.econ.197060
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    References listed on IDEAS

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    Cited by:

    1. Wesseler, J. & Weichert, M., 1999. "Der Wert zusätzlicher Informationen bei Investitionsentscheidungen mit einem hohen Grad an Irreversibilität," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 35.

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    Keywords

    Agribusiness; Agricultural and Food Policy;

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