Arping, Stefan; Diaw, Khaled M. - In: International Journal of Industrial Organization 26 (2008) 2, pp. 490-501
This paper studies how sunk costs affect a financially constrained incumbent's ability to deter entry into its market. Sunk costs make it less attractive to the incumbent to accommodate entry by liquidating assets in place and exiting the market. This may render entry by a prospective rival...