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Sunk Costs and Market Structure: Analyzing Competition and Strategic Decision-Making
"In economics and corporate strategy, the concept of sunk costs refers to expenditures that have already been incurred and cannot be recovered. When evaluating market structure and the intensity of competition, firms must distinguish between these unrecoverable outlays and prospective costs to avoid the "sunk cost fallacy," which often leads to irrational decision-making and distorted competitive positioning. Understanding Sunk Costs in Competitive Markets Sunk costs are defined by their irrecoverability. Once a company invests in specialized machinery, proprietary research and development, or specific marketing campaigns that cannot be repurp..."
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