To what extent are capital investments sunk costs? This question is addressed by examining the salvage values of discarded metalworking machinery. Even though such assets are expected to be non-specific, many discarded assets are scrapped rather than sold on second-hand markets. Econometric...

We study the valuation of used capital assets, specifically metalworking machinery used in Swedish manufacturing industries. Two samples, collected 1960 and 1990, with information on salvage values of individual machine tools, show that 47% and 78% of the discarded assets were scrapped rather...