Sunk Costs

Definition: Sunk costs are unrecoverable past expenditures. These should not normally be taken into account when determining whether to continue a project or abandon it, because they cannot be recovered either way. It is a common instinct to count them, however.

Terms related to Sunk Costs:

• Average Total Cost
• Transaction Costs
• The Cost Curve

About.Com Resources on Sunk Costs:

• Sunk Costs and Trade Deadline Baseball Deals
• Baseball Players and Opportunity Costs
• How to Understand and Calculate Cost Measures

Writing a Term Paper? Here are a few starting points for research on Sunk Costs:

Books on Sunk Costs:

• Sunk Cost and Market Structure
• The Effects of Competition: Cartel Policy and the Evolution of Strategy and Structure in British Industry
• Pushing the Numbers in Marketing: A Real-World Guide to Essential Financial Analysis

Journal Articles on Sunk Costs:

• The Psychology of Sunk Cost
• The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs
• Fixed Costs, Sunk Costs, Entry Barriers, and Sustainability of Monopoly