Ann Davis <[email protected]> wrote: > Except that the bridge at "10% of normal cost" is only possible because of > the sunk costs (either the owner or a seller of a 90% complete bridge), and > discrete vs. continuous production functions.
the historical cost of the unfinished bridge is the sunk cost. But what's important to the company building the bridge are the expected future profits, the cost of finance, and the like. The past payment of the sunk costs may be historically necessary to the state of current expected profits, but capitalist profit-making firms don't think historically. If we're only interested in capitalist firms' behavior, then Henry Ford was right: "history is bunk." In other contexts, he was wrong. > They say that marginal decision-making as sufficient for analysis depends on > the assumption of "convexity." Alternative assumptions include > non-convexity such as discrete units, as well as path dependence, increasing > returns, switching costs, network externalities, and fiancial capital > constraints. See pp. 178-188 in the 2005 edition. their discussion is good. It's much more important than the role of sunk costs. -- im Devine / "laugh if you want to / really is kinda funny / cause the world is a car / and you're the crash test dummy" -- Devil Makes Three. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
