Search results for "Sunk costs"
showing 8 items of 8 documents
Foreign sourcing and exporting
2020
The aim in this paper is analysing the role of sourcing intermediate inputs internationally on export decisions, distinguishing whether intermediate are sourced from firms belonging to the same business group or from independent suppliers. To analyse firm’s export decision, we use a specification that also accounts for sunk costs and the accumulated experience in export markets (i.e., foreign markets learning). We consider that importing intermediates might have direct and indirect effects (operating through productivity) on the export participation decision. The direct effects on exporting are isolated once we control for productivity and the effects of belonging to an international group.…
A Neofunctionalist Perspective on the ‘European Refugee Crisis’: The Case of the European Border and Coast Guard
2017
Initial literature on the ‘European refugee crisis’ discerned intergovernmental tendencies in its management. This paper examines whether neofunctionalism may be able to explain a major case of ‘European refugee crisis’ policy-making, the negotiations on the European Border and Coast Guard regulation. We argue, somewhat counterintuitively, that the theory considerably furthers our respective understanding. The crisis acted as a catalyst exposing the weaknesses of a system that pitted a supranational Schengen against a largely intergovernmental external border regime, notwithstanding a developing Frontex. These dysfunctionalities have been widely fostered by both national and supranational d…
THE ROLE OF SUNK COSTS IN THE DECISION TO INVEST IN R&D
2009
We present a dynamic empirical model of a firm's R&D decisions that is consistent with the existence of sunk R&D costs, taking into account that these costs may differ between small and large firms, and among different technological regimes. We estimate a multivariate dynamic discrete choice model using firm-level data of Spanish manufacturing for 1990–2000. Conditional on firm heterogeneity and serially correlated unobservable factors, we find that R&D history matters. This true state dependence allows inferring the existence of sunk R&D costs associated with performing R&D. Sunk R&D costs are found to be higher for large, high-tech firms.
Participation Costs for Responders Can Reduce Rejection Rates in Ultimatum Bargaining
2008
This paper reports data from an ultimatum mini-game in which responders first had to choose whether or not to participate. Participation was costly, but the participation cost was smaller than the minimum payoff that a responder could guarantee himself in the ultimatum game. Compared to a standard treatment, we find that the rejection rate of unfavorable offers is significantly reduced when participation is costly. A possible explanation based on cognitive dissonance is offered.
Quantifying sunk costs and learning effects in R&D persistence
2020
Abstract This paper analyzes and quantifies the fundamental factors that are likely to cause persistence in performing R&D activities: the existence of sunk costs associated with R&D activities and the process of learning that characterizes this type of activity. We estimate our model with Spanish manufacturing firms for the period 1991-2014. By decomposing the effects of sunk costs and learning effects, we find that both are important determinants of R&D persistence, and that failing to allow for learning systematically overestimates sunk cost effects. Both large firms and SMEs benefit from direct and indirect (via productivity) effects of R&D experience, but in large firms this is more li…
THE DURATION OF FIRM-DESTINATION EXPORT RELATIONSHIPS: EVIDENCE FROM SPAIN, 1997-2006
2012
I. INTRODUCTION The traditional trade literature that investigates aggregate trade flows emphasizes the sizeable increase in trade relationships since World War II and the remarkable persistence of trade flows. However, recent microlevel studies point out that under the stable aggregate trade flows there is a rich dynamics at firm- and/or product-level with a high turnover. In fact, international-market presence is often a transitory and an uncommon phenomenon. At any period, only a small percentage of home-based firms participate in trade and exporting firms are different from non-exporters (larger, more productive, etc.). Moreover, there is much persistence in exporting status; being an e…
Sunk cost of local elected representatives in situation of fiscal competition: An example of escalating commitment
2018
Abstract Introduction Competition between French local communities to build infrastructures to attract enterprises and residents could sometimes result in irrational public spending. Objectives Show the influence of psychological factors and the phenomenon of escalating commitment in particular on this type of economic decision. Method We conducted a survey comprising four scenarios which were sent to 285 local elected representatives and we study the impact of the factors “Amount of sunk costs” and “Level of project completion” on two dependent variables, “the desire to complete the project” and “the judgment regarding the quality of the investment”. The scenarios presented a project which…