Template-type: ReDif-Paper 1.0
Author-Name: Bunte,F.
Author-Name: Maks,H.
Author-workplace-name: METEOR
Title: Contestability and sunk costs: An analysis of product R&D competition
Abstract: The paper shows that Bertrand competition and contestability can be reconciled with sunk costs. When average total costs are constant over a range of output, marginal cost pricing does not conflict with the budget constraint faced by firms. Empirical observations support the notion of constant average total costs. When average total costs are constant, there is no trade-off between dynamic economies and static efficiency. The argument is applied to product R&D competition.
Keywords: industrial organization ; 
Series: Research Memoranda
Creation-Date: 1997
Number: 009
File-URL: http://arnop.unimaas.nl/show.cgi?fid=596
File-Format: application/pdf
File-Size: 100063
Handle: RePEc:unm:umamet:1997009